By F. Maria Bonaventure
First Deputy Prime Minister, Mullah Abdul Ghani Baradar, while addressing various ministries in Kabul, said that the aid provided by international donors would alleviate urgent needs for a short period of time, adding that the ministries must work toward self-sufficiency. The acting deputy prime minister has stated that Afghanistan will work towards self-sufficiency in the near future and in the years to follow to fulfill the economic needs of Afghanistan. When Afghanistan’s economy is struggling for revival – though the present situation being faced by Afghanistan is different from that of the economic chaos being faced by Srilanka – is it the correct strategy to be adopted by the present rulers considering the various options that are available for a country like Afghanistan when it is striving to achieve economic growth and economic independence
The strategy adapted to by the acting first deputy prime minister of Afghanistan is that of the,” up by the bootstraps” as had been defined by a school of economists. The Economists who suggested this strategy for economic development are of the view that resources that are to be promoted and developed to achieve economic growth of any country must be originated from the internal sources only. To put it in other words the burden of promoting the resources for economic growth is to be borne by the internal sources of that nation only. The internal resources thus generated internally are to be diverted or deployed in a judicious manner, which will promote economic growth.
When a country adopts to this strategy of,” up by the bootstraps” the nation takes to the route of economic growth wherein the citizens of the country make substantial sacrifice in their level of consumption. During this time of economic transition, the country does not rely hugely on foreign capital be it labor or capital which is the humanitarian aid in the case of Afghanistan.
The economists who propagate this school of thought are of the opinion that by diverting the vast saving potential that is available in an underdeveloped country like Afghanistan in the form of disguised unemployment from a sector like agriculture to another sector like infrastructure development which is labor intensive which is to put in other words that needs a large work force.
According to Investopedia, “disguised unemployment is said to exist when productivity is low and when too many numbers of workers are employed in too few jobs. Disguised unemployment also refers to any part of the population that is not employed at full capacity.”
“Up by the bootstraps” strategy was tested successfully in many under developed countries which have reached the developed nation status now.
The economic growth was achieved by developing the domestic resources in the bamboo-curtained country, China when it rewrote its economic story to achieve the present status. The principle adopted to by China in achieving its industrial and agricultural revolution was directly by mobilizing and diverting its under employed human capital that was not employed to its full capacity to investment in productive purposes needed for the industrial and agricultural revolutionary change. Its own citizens did not permit when the human capital was diverted at the initial stages increase in consumption internally. A common Chinese citizen was not permitted to enjoy the fruits of the economic growth for which they have strived hard and strived for but were forced to suffer making huge sacrifices.
In 1952, 83 percent of the Chinese workforce was employed in agriculture. The figure remained high, but was declining steadily, throughout the early phase of industrialization between the 1960s and 1990s, but in view of the rapid population growth this amounted to a rapid growth of the industrial sector in absolute terms, of up to 11 percent per year during the period. By 1977, the fraction of the workforce employed in agriculture had fallen to about 77 percent, and by 2012, 33 percent.
As reported in the beginning of January, when the country was on its path to economic transition the wages of the working class was kept very low. The same way, cash starved Rulers of Afghanistan paid salaries in the form of wheat to government employees when the economic crisis deepened in Afghanistan.
This is an identical model of the Islamic nation following the “Up by Bootstraps” method in its way to economic growth. Absence of trade unions In Afghanistan and the psychological fear over the Rulers of Afghanistan may make the moves initiated by the Afghanistan rulers a success. To give a further impetus the Rulers of Afghanistan can impose conditions on the Agriculturalists to sell their market surplus to the Government at a rate lower than the prevailing market rates for the same commodity. The said strategy could also be made successful by freezing the income level of the urban citizens who are mainly the civil servants of the country.
Thus, it could be seen that the Islamic hardliners can bring about the change only by forcing its citizens to maintain a low standard of living. This strategy, which is being practiced by the present Rulers of Afghanistan, is a primitive method and will be a success only in a country ruled in the dictatorial form. The citizens of Afghanistan have enjoyed 20 years of democratic rule and especially after the exposure they got after the American invasion are aware of their civil rights. Hence this could be treated as one of the reasons for the non-popularity of the present rulers among the urban masses.
Method of,” Transmit Burden”. Transmit burden is the alternate method that could be used by any government in the place of,” Up by Bootstraps” method in the process of economic transformation. Under this method of,” Transmit Burden” the labor class and the working masses are permitted to enjoy the fruits of the economic growth by permitting them to enjoy a higher standard of living by higher wages and salaries. The burdens that are created in the way to economic transition and growth are passed on to the future generations.
Domestic savings will form a part of the capital formation in the country. The level of domestic savings in Afghanistan is very meagre as could be seen from the world bank report. The report of the US Special Inspector General for Afghanistan Reconstruction (SIGAR) states that” Since the takeover of the Islamic Emirate in August 2021, “humanitarian conditions have deteriorated with over 24.4 million people in need of humanitarian assistance in Afghanistan—an increase from 18.4 million in 2021.”
The void of the funds needed for capital may be filled by foreign aid, which may be by way of humanitarian aid in the case of Afghanistan. Another world bank report stated on April 19th that The World Bank has resumed work on three projects in Afghanistan focused on health, agriculture and livelihoods, but will maintain a hold on some $150 million for education projects, two sources familiar with the decision said Tuesday.
Under this transmit burden method; the burdens of humanitarian aid will be passed on to the posterity along with the benefits passed on by the sacrifices of the present generation. The process of economic transmission under this process will take a comparatively longer time. The best example of the country that chose this method for its economic transformation is India.
There are various other methods and strategies that are propagated by various economists for countries to achieve economic growth. They are:
- Strategy of balanced growth
- Strategy of unbalanced growth
- Strategy of big push and
- Strategy of minimum effort (We will discuss about these strategies in a follow up article in detail)
To conclude, it could be clearly seen and understood that for the economic transition to take place in Afghanistan the socio-cultural attitudes of its citizens will be the most basic element. The attitudes of the citizens are to be changed in the proper direction, which will be possible only with right government perspectives. The national character of any country’s citizens like the level of literacy and their willingness to invite innovative thoughts and ideas will pave way for a quicker economic growth and transition. An important point that needs to be noted when a country thrives for economic development must be on the availability of competent and efficient administrative personnel. There should be availability of political stability and peace in the country. The same way corruption should be weeded out completely in the administrative set up to make the economic transition, which the Rulers of Afghanistan want to bring about a success.
The author has formerly served in Azizi Bank, Afghan United Bank and Maiwand Bank as Chief Operations Officer. He has also served as a Senior International Adviser for the Exchanger Zone & Aryapool group.