Trade as a vehicle for growth in Afghanistan : challenges and opportunities

With further declines in international assistance expected over the coming years, the government of Afghanistan faces a new challenge of enabling new growth drivers. One such driver is trade. Decades of civil war and military occupation that culminated in the fall of the Taliban in 2001, have devastated Afghanistan. High levels of conflict destroyed infrastructure, displaced a significant share of the population, incentivized informal and illicit economic activities, and jeopardized the delivery of public services. Trade could be an important channel for accelerating growth in Afghanistan. A plausible trade-driven growth scenario for Afghanistan should promote economic and export diversification. This report brings new evidence on the opportunities and challenges for development in the areas of trade in goods, trade in services, and transit trade. It also provides recommendations for an appropriate sequencing of policy reforms and strategic infrastructure investment to support potential growth in these sectors. The main findings of this report suggest that government intervention should focus on two complementary areas of competitiveness and connectivity.