The Emerging Market in Afghanistan

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KABUL, Afghanistan — For 12 years now, the U.S. and its allies have been militarily, economically and politically involved in Afghanistan. The costs associated with U.S. involvement in Afghanistan are well over $500 billion, and the ramifications of such high spending will be felt for decades, according to research conducted by the Center for Strategic and International Studies.

The global conversation on Afghanistan focuses exclusively on whether or not the nation is secure, but rarely anyone talks about the economic potential of Afghanistan — why?

In a little over a decade, Afghanistan has dramatically changed, and its economy is nothing like it was in 2002. Back then, Afghanistan’s gross domestic product was only $2.5 billion, according to World Bank figures. Today, that number has exploded to $20.7 billion.

The Taliban’s loss of power in Afghanistan, coupled with international and domestic efforts to improve educational conditions, has meant more opportunities for children (especially girls) to go to school. Enrollment increased over 1,000 percent from 2002 to 2012, and approximately 40 percent of students are girls.

When the Taliban was in complete control in Afghanistan a little over a decade ago, absolutely no girls were allowed to attend school.

The change in schooling is an important indicator of the future of Afghanistan’s workforce. The Middle East Institute reported that, according to U.N. figures, 46 percent of the country’s population is under the age of 14 — a substantial fraction of the country’s population of 30 million.  Greater access to education would considerably reduce the need to become rural farmers of opiates, a particular problem in Afghanistan. Access to education, higher education in particular, also allows for a more diversified workforce able to add value to existing industries and the potential to create entirely new ones.

A 2010 announcement revealed that the U.S. Geological Survey and the Pentagon discovered Afghanistan was, quite literally, a gold mine. The Arab state is sitting on $1 trillion of untapped gold, lithium, copper, iron and cobalt — important resources used in everyday electronics and equipment in the developed world. Multi-billion dollar contracts have already been signed in an effort by large companies to tap into the country’s vast reserves. The economic potential of Afghanistan’s mineral resources also lies in the government’s ability to tax the sector and use the funds to reinvest in infrastructure and education.

Lithium production in Afghanistan could mean cheaper prices for manufacturers of lithium-ion batteries in the U.S. and more jobs for the Afghan people. This mutually beneficial economic partnership between the U.S. and Afghanistan is another reason why investors should take greater notice of the Arab nation.

Another important industry that’s overlooked in Afghanistan is its telecommunications and media industry. There are now six mobile phone carriers, over 175 radio stations, 70 plus television channels and hundreds of print publications, according to the Middle East Institute.

The emerging market in Afghanistan is rife with opportunity for expanding Afghan culture, advertising and marketing. A rising economy means more disposable income, and more disposable income means a greater market for selling products.

The investment potential of Afghanistan is still developing, but Afghanistan’s economic growth has proved impressive despite years of conflict and internal changes.

Joseph McAdams

Sources: Middle East Institute, The World Bank, CSIS, The Independent
Photo: Bloomberg,

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