Afghanistan’s heavy reliance on international aid — in 2021 foreign aid comprised 75 percent of its total economy — has left it in a low equilibrium trap.
The withdrawal of NATO and U.S. military forces in 2021 led to the collapse of the Afghan Republic and paved the way for the Taliban to recapture power in Kabul, which in turn resulted in the suspension of around $2 billion in aid through the Afghanistan Reconstructive Trust Fund (ARTF) and International Development Association (IDA). This exposed Afghanistan to significant macroeconomic woes, livelihood challenges, disruption of critical infrastructure development and soaring unemployment. A World Bank report says that as of November 2023, half of the Afghan population lives in poverty, with 15 million of its 43.2 million population facing food insecurity.
The presence of the international community in Afghanistan over the past two decades, significantly impacted its…
