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Definitions of development on the Web:

• act of improving by expanding or enlarging or refining; "he congratulated themon their development of a plan to meet the emergency"; "they funded research anddevelopment"

•

a process in which something passes by degrees to a different stage (especially amore advanced or mature stage); "the development of his ideas took many years";"the evolution of Greek civilization"; "the slow development of her skill as awriter"

• growth: (biology) the process of an individual organism growing organically; apurely biological unfolding of events involved in an organism changing graduallyfrom a simple to a more complex level; "he proposed an indicator of osseousdevelopment in children"

• a recent event that has some relevance for the present situation; "recentdevelopments in Iraq"; "what a revolting development!"

• exploitation: the act of making some area of land or water more profitable or 

productive or useful; "the development of Alaskan resources"; "the exploitation of copper deposits"• a district that has been developed to serve some purpose; "such land is practical

for small park developments"• a state in which things are improving; the result of developing (as in the early part

of a game of chess); "after he saw the latest development he changed his mind andbecame a supporter"; "in chess your should take care of your development beforemoving your queen"

• processing a photosensitive material in order to make an image visible; "thedevelopment and printing of his pictures took only two hours"

• (music) the section of a composition or movement (especially in sonata form)

where the major musical themes are developed and elaborated

What is Development?

Volunteering & Development > What is Development? 

Development is a complex issue, with many different and sometimes contentiousdefinitions. A basic perspective equates development with economic growth. TheUnited Nations Development Programme uses a more detailed definition- according tothem development is 'to lead long and healthy lives, to be knowledgeable, to have

access to the resources needed for a decent standard of living and to be able to

participate in the life of the community.'

Achieving human development is linked to a third perspective of development whichviews it as freeing people from obstacles that affect their ability to develop their ownlives and communities. Development, therefore, is empowerment: it is about localpeople taking control of their own lives, expressing their own demands and finding their own solutions to their problems.

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Why learn about Development? 

Volunteers travel to developing countries to work on a huge variety of projects such asassisting in under-resourced schools, offering expertise at under-equipped medicalfacilities, campaigning on human rights issues, providing care for HIV/AIDS orphans,

promoting improved agricultural practices and so on. But why do these problems exist inthe first place and why are they not easily solved through our goodwill and charity?

Learning about development can help us understand more about the causes of andsolutions to these problems and can help us be better informed volunteers, addressing notjust the superficial poverty related issues but the deeper rooted causes as well. It can helpus to have a more complex and accurate impression of the developing world than what iscommonly shown to us through charity advertising. It can also help us when we return toeducate others about the issues involved.

Development economics is a branch of economics that looks at howdevelopment works from an economic perspective in developing nations. As a field,development economics looks not only at traditional economic rubrics, such as GDP or per-capita income, but also looks at things like standard of living, health care, education,and equal rights opportunities. As a result, development economics concerns itself a greatdeal with political processes and agendas, as well as with more specific economicagendas.

Although some of the patterns of thought seen in development economics have existed ineconomics for quite some time, as a cohesive discipline it really grew out of the post-World War II period in Europe. With nations ravaged by the war, and their economies inshambles, particularly in Eastern Europe, it became necessary to look at the best ways toindustrialize those nations to maximize their economic potential while protecting thecitizenry. In subsequent years the theories developed there began to be generalized andadapted to other developing regions of the world, including Latin America, Asia, andAfrica.

What is Economic Development?

Economic development means different things to different people. On a broadscale, anything a community does to foster and create a healthy economy canfall under the auspice of economic development. Today's economic developmentprofessionals are trying harder than ever to define their field in terms that aremore concrete and salient to policymakers, the public, and other professionals.There are probably as many definitions for economic development as there arepeople who practice it. Below is CALED's definition as published in the EconomicDevelopment Handbook:

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From a public perspective, local economic development involves the allocation of limited resources - land, labor, capitol and entrepreneurship in a way that has apositive effect on the level of business activity, employment, income distributionpatterns, and fiscal solvency. 

It is a process of deliberate intervention in the normal economic growth bymaking it easier or more attractive. Today, communities in California are givingattention to what they can do to promote fiscal stability and greater economicdevelopment. 

Economic development is a concerted effort on the part of the responsiblegoverning body in a city or county to influence the direction of private sector investment toward opportunities that can lead to sustained economic growth.Sustained economic growth can provide sufficient incomes for the local labor force, profitable business opportunities for employers and tax revenues for maintaining an infrastructure to support this continued growth. There is no

alternative to private sector investment as the engine for economic growth, butthere are many initiatives that you can support to encourage investments wherethe community feels they are needed the most. 

It is important to know that economic development is not communitydevelopment. Community development is a process for making a community abetter place to live and work. Economic development is purely and simply thecreation of wealth in which community benefits are created. There are only threeapproaches used to enhance local economic development. They are: 

What is Afghanistan's economic status?

Afghanistan is really a geographic area that is occupied by a large number of tribes withvarious kinds of associations and regard for, or enmity with other tribes. The outsideworld is more interested in making a single country of Afghanistan than most of thetribes that occupy the land. It is very rugged terrain in most of the country, so it isdifficult to grow things, difficult to transport things, and generally a tough place to makea living. So the economic status in much of the country is quite a bit lower in terms of astandard of living than other countries.

Economy of Afghanistan

From Wikipedia, the free encyclopediaJump to: navigation, search 

Economy of Afghanistan

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Afghan Ministry of Finance at  Kabul in 2002

Rank  91stCurrency Afghani (AFN)Fiscal year 21 March - 20 MarchTrade

organizationsSAARC, ECO, negotiating WTO accession

Statistics

GDP $29.81 billion (2010 est.)GDP growth 8.9% (2010 est.)GDP per capita $1,000 (2009 est.) [1]

GDP by sectoragriculture: 31% industry: 26% services: 43% (2008)

Inflation (CPI) 30.5% (2009)Population

below poverty line36% (2009)

Labor force 15 million (2004)Labor force

by occupation

agriculture 78.6%, industry 5.7%, services15.7% (2009)

Unemployment 35% (2008)

Main industries

small-scale production of  textiles, soap,furniture, shoes, fertilizer , apparel, food-products, non-alcoholic beverages, mineralwater , cement; handwoven carpets; naturalgas, coal, copper 

Ease of Doing

Business Rank 167th [2]

External

Exports $2.128 billion (2009)

Export goods

opium, fruits and nuts, Afghan rugs, wool,cotton, hides and pelts, precious and semi-precious stones

Main export

partners

United States 26.47%, India 23.09%,Pakistan 17.36%, Tajikistan 12.51% (2009)

Imports $8.550 billion (2009)

Import goodscapital goods, food, textiles and petroleum products; most consumer goods

Main import Pakistan 26.78%, United States 24.81%,

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partnersIndia 5.15%, Germany 5.06%. Russia 4.04% (2009)

Public finances

Public debt $2.7 billion (2008)Revenues $2.587 billion (2009 including grants)

Expenses $2.86 billion (2009 total exp.)Main data source: CIA World Fact Book 

All values, unless otherwise stated, are in US dollars

The economy of Afghanistan has improved significantly since 2002 due to the infusionof multi-billion dollars in international assistance and investments,[3] as well asremittances from Afghan expats.[4] It is also due to dramatic improvements in agriculturalproduction and the end of a four-year drought in most of the country. However,Afghanistan still remains one of the poorest and least developed countries in the worldthat is highly dependent on foreign aid. As of 2010, the nation's GDP is $29.81 billionand the GDP per capita is $1,000.[1]

About 35 percent of its population is unemployed and live below the poverty line, suffering from shortages of housing, clean drinking water, electricity and employment.The Karzai administration along with international donors have remained committed toimproving access to these basic necessities by prioritizing infrastructure development,education, housing development, jobs programs, medical care, and economic reform. Thereplacement of the opium trade, which probably makes up about one-third of thecountry's GDP, is one of several potential spoilers for the economy over the long term.

Contents

[hide]

• 1 Economic history • 2 Agriculture and livestock  

o 2.1 Fishing o 2.2 Forestry 

• 3 Trade and industry • 4 Economic development and recovery • 5 National accounts • 6 See also • 7 References 

• 8 External links 

[ edit ] Economic history 

Historically, there has been a dearth of information and reliable statistics aboutAfghanistan's economy.

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The 1979 Soviet invasion and ensuing civil war destroyed much of the country's limitedinfrastructure, and disrupted normal patterns of economic activity. Eventually,Afghanistan went from a traditional economy to a centrally planned economy up until2002[citation needed ] when it was replaced by a free market economy. Gross domestic producthas fallen substantially since the 1980s due to disruption of trade and transport as well as

loss of labor and capital. Continuing internal strife severely hampered domestic efforts torebuild the nation or provide ways for the international community to help.

According to the International Monetary Fund, the Afghan economy grew 20% in thefiscal year ending in March 2004, after expanding 30% in the previous 12 months. Thegrowth is attributed to international aid and to the end of droughts. An estimated $4.4billion of aid entered the nation from 2002 to 2004. A GDP of $4 billion in fiscal year 2003 was recalculated by the IMF to $6.1 billion, after adding proceeds from opium products. Mean wages were $0.50 per manhour in 2009.

[ edit ] Agriculture and livestock 

See also: Pomegranate production in Afghanistan and Opium production in Afghanistan

The Afghan economy has always been agricultural, despite the fact that only 12% of itstotal land is arable and less than 6% currently is cultivated.[citation needed ] Agriculture production is constrained by an almost total dependence on erratic winter snows andspring rains for water. As of 2007, the country's fruit and nut exports were at $113million per year but could grow to more than $800 million per year in 10 years given theproper investment.[5] Afghanistan is known for producing some of the finest fruits,especially pomegranates, grapes, and melons. Several provinces in the north of thecountry (i.e. Badghis and Samangan) are famous for pistachio cultivation but the areacurrently lacks proper marketing and processing plants. It is claimed that some Indian

companies buy Afghan pistachios for a very low price, process them in India and sell towestern countries as Indian products. However, the Afghan government is planning tobuild storage facilities for pistachios since receiving bumper crops in 2010.[6]

Workers processing pomegranates ("anaar" ), which Afghanistan is famous for in Asia.

Wheat and cereal production is Afghanistan's traditional agricultural mainstay. Theoverall agricultural production dramatically declined following four years of drought aswell as the sustained fighting and instability in rural areas. Soviet efforts to disrupt

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production in resistance-dominated areas also contributed to this decline, as did thedisruption to trince 2002, more than 4 million refugees returned back to Afghanistan.Many of these former refugees are now involved in the farming industry. Some studiesindicate that agricultural production and livestock numbers may only be sufficient to feedabout half of the country's population. Shortages are exacerbated by the country's limited

transportation network, which is currently being rebuilt. A report by the Food andAgriculture Organization (FAO) states that Afghanistan was nearing self-sufficiency ingrain production.[7]

The availability of land suitable for grazing has traditionally made animal husbandry animportant part of the economy. There are two main types of animal husbandry: sedentary,practiced by farmers who raise both animals and crops; and nomadic, practiced by animalherders known as Kuchis. Natural pastures cover some 7,500,000 acres (30,400 km2) butare being overgrazed. The northern regions around Mazar-i-Sharif and Maymanah werethe home range for about six million karakul sheep in the late 1990s. Most flocks move tothe highlands in the summer to pastures in the north. Oxen are the primary draft power 

and farmers often share animals for plowing. Poultry are traditionally kept in manyhouses, mostly in rural households.

Much of Afghanistan's livestock was removed from the country by early waves of refugees who fled to neighboring Pakistan and Iran. In 2001, the livestock population inAfghanistan had declined by about 40% since 1998. In 2002, this figure was estimated tohave declined further to 60%. An FAO survey done in the northern regions in spring2002 showed that in four provinces (Balkh, Juzjan, Sar-e Pol, and Faryab), there was aloss of about 84% of cattle from 1997 to 2002 and around 80% of sheep and goat. Thegreat majority of Afghans traditionally raise sheep instead of goats because goat meat isnot much popular within Afghanistan. After 200, the Afghan ministry of agriculture and

livestock  and USAID have been helping to regrow the number of livestocks throughoutthe country. This is done by providing Afghan villagers training and animals to start with.[8]

[edit] Fishing

The nation has plenty of water reserves and suitable climate for  fish farming. Fishing takes place in the lakes and rivers, such as in Sarobi and Mahipar area. Fish constitute asmaller part of the Afghan diet today because fish farmers are unable to produce enoughfish to keep up with the demands of customers. Using explosives for fishing, calleddynamite fishing, became popular in the 1980s and is still practiced by some even though

it is illegal today.

[9]

The annual catch was about 900 tons in 2003. Most fish and seafoodis imported from neighboring Pakistan, Iran, the United Arab Emirates and other countries.[10] In recent years, USAID has helped many Afghans in establishing fish farmsacross the country.[11] There are about 300 fish farms throughout the country and thelargest one is at the Qargha, which supplies fish eggs to the other ones. [9]

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[edit] Forestry

Afghanistan's timber has been greatly depleted, and since the mid-1980s, only about 3%of the land area has been forested, mainly in the east. Significant stands of trees havebeen destroyed by the ravages of the war. Exploitation has been hampered by lack of 

power and access roads. Moreover, the distribution of the forest is uneven, and most of the remaining woodland is presently found only in mountainous regions in the southeastand south. The natural forests in Afghanistan are mainly of two types: dense forests of oak , walnut, and other species of nuts that grow in the southeast, and on the northern andnortheastern slopes of the Sulaiman ranges; and sparsely distributed short trees andshrubs on all other slopes of the Hindu Kush. The dense forests of the southeast cover only 2.7% of the country. Roundwood production in 2003 was 3,148,000 cubic metres,with 44% used for fuel. The destruction of the forests to create agricultural land, logging, forest fires, plant diseases, and insect pests are all causes of the reduction in forestcoverage. Illegal logging and clear-cutting by timber smugglers have exacerbated thisdestructive process.

[ edit ] Trade and industry 

Further information: Transport in Afghanistan and Mining in Afghanistan

Afghan rug weavers in Herat province

Afghanistan-Tajikistan bridge after completion in 2007 is one of several bridges used for trade between Afghanistan and Central Asia.

The current trade between Afghanistan and other countries is at US$5 billion a year. In1996, legal exports (excluding opium) were estimated at $80 million and importsestimated at $150 million per year. Since the collapse of the Taliban government in 2001,new trade relations are emerging with the United States, Pakistan, Iran, Turkmenistan, theEU, Japan, Uzbekistan, India and other countries. Trade between Afghanistan and the

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U.S. is beginning to grow at a fast pace, reaching up to approximately $500 million per year.[12] The Afghan handwooven rugs are one of the most popular products exportedfrom the country. Other products include hand crafted antique replicas, precious andsemi-precious stones as well as leather and furs.

Afghanistan is endowed with a wealth of natural resources, including extensive depositsof natural gas, petroleum, coal, marble, gold, copper , chromite, talc, barites, sulfur , lead, zinc, iron ore, salt, precious and semi-precious stones, and many other materials. In 2006,a U.S. Geological Survey estimated that Afghanistan has as much as 36 trillion cubic feet(1.0×1012 m3) of natural gas, 3.6 billion barrels (570×106 m3) of oil and condensatereserves.[13] According to a 2007 assessment, Afghanistan has significant amounts of undiscovered non-fuel mineral resources.[14] Geologists also found indications of abundant deposits of colored stones and gemstones, including emerald, ruby, sapphire,garnet, lapis, kunzite, spinel, tourmaline and peridot.[15] In 2010, U.S. Pentagon officialsalong with American geologists have revealed the discovery of nearly $1 trillion inuntapped mineral deposits in Afghanistan.[16] Plans are being made by the Afghan

government to begin extracting these but with the Taliban insurgency and the corruptionthere is no telling what will happen.

"We know that the extraction efforts are challenged by remote locations, some of which

are in areas controlled or at least threatened by the insurgency. There's weak infrastructure. This is obviously something that we are trying to expand for the benefit of 

Afghanistan's economy... So it is a potentially important development. We're not 

underestimating the challenges involved here. But obviously, if these things can bedeveloped over time, that offers the ability for Afghanistan to have the resources

necessary to develop a modern economy, a legal economy, as opposed to the economy

they currently have now, which is heavily dependent on narcotics..." [17]

— U. S. State Department spokesman P. J. Crowley, June 2010

A memo from the Pentagon stated that Afghanistan could become the "Saudi Arabia of lithium".[18] Some believe, including Afghan President Hamid Karzai, that the untappedminerals are worth at least $3 trillion.[19][20][21] Afghanistan has signed a copper deal withChina (Metallurgical Corp. of China Ltd.) in 2008, which is to a large scale project thatinvolves the investment of $2.8 billion dollars by China and an annual income of about$400 million dollars to the Afghan government. The country's Ainak copper mine,located in Logar province, is one of the biggest in the world and is expected to providejobs to 20,000 Afghans. It is estimated to hold at least 11 million tonnes or 33 billion USdollars worth of copper.[22][23] Experts believe that the production of copper could beginwithin two to three years and the iron ore in five to seven years as of 2010.[24] The nation'sother recently announced treasure is the Hajigak iron ore mine, located 130 miles west of Kabul and is believed to hold an estimated 1.8 billion to 2 billion metric tons of themineral used to make steel. Companies from India, Turkey, China, Iran and others haveshown interest in participating in the Hajigak iron ore tender. [25]

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Afghan exports in 2006

Afghanistan's important resource in the past has been natural gas, which was first tappedin 1967. During the 1980s, gas sales accounted for $300 million a year in export revenues(56% of the total). Ninety percent of these exports went to the Soviet Union to pay for imports and debts. However, during the withdrawal of Soviet troops in 1989,Afghanistan's natural gas fields were capped to prevent sabotage by the Mujahideen. Gasproduction has dropped from a high of 8.2 million cubic metres (2.9 × 108 cu ft) per dayin the 1980s to a low of about 600 thousand cubic meters (2.2 × 107 cu ft) in 2001. After the formation of the new Karzai administration, production of natural gas has beenrestored again.[26] A locally owned company, Azizi Hotak General Trading Group, is

currently the main supplier of diesel fuel, gasoline, jet fuel and LPG in Afghanistan.[27]

Trade in goods smuggled into Pakistan once constituted a major source of revenue for Afghanistan. Many of the goods that were smuggled into Pakistan have originally enteredAfghanistan from Pakistan, where they fell under the Afghan Trade and Transit Agreement (ATTA). This permitted goods bound for Afghanistan to transit throughPakistan free of duty. This resulted in considerable problems for the Pakistanigovernment, particularly its customs bureau who realized that many of the items beingresold on the black market in Pakistan were the very same items being allowed duty freeexemption from Pakistani ports (mainly Karachi) on their way to Afghanistan. WhenPakistan clamped down in 2003 on the types of goods permitted duty-free transit, and

introducing stringent measures and labels to prevent such practices, re-routing of goodsthrough Iran from the Persian Gulf increased significantly. The pre-2003 smuggling tradeprovided undocumented jobs to tens of thousands of Afghans and Pakistanis, but alsohelped fuel the black economy, often intertwined with the drug cartels, of both countries.Afghanistan and Pakistan recently signed into law a new Afghan-Pak Trade and Transit 

Agreement (APTTA), which allows their shipping trucks to transit goods within bothnations. This revised US-sponsored APTTA agreement also allows Afghan trucks totransport exports to India via Pakistan through the Wagah crossing point.[28][29] Accordingto Afghanistan's Chamber of Commerce and Industries deputy head, Khan Jan Alokozai,about 500 shipping containers of trade goods enter Afghanistan via Pakistan on a dailybasis.[30]

[ edit ] Economic development and recovery 

Further information: Communications in Afghanistan

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New commercial buildings such as this one in Kabul are constructed across the country tohelp modernize the financial sector 

Afghanistan embarked on a modest economic development program in the 1930s. Thegovernment founded banks; introduced paper money; established a university; expandedprimary, secondary, and technical schools; and sent students abroad for education. In1956, the government of Afghanistan promulgated the first in a long series of ambitiousdevelopment plans. By the late 1970s, these had achieved only mixed results due to flawsin the planning process as well as inadequate funding and a shortage of the skilledmanagers and technicians needed for implementation.

The nation's banking system has improved recently with over fourteen different banks inoperation. They include Da Afghanistan Bank , Afghanistan International Bank , KabulBank , Azizi Bank , Pashtany Bank , Standard Chartered Bank , First Micro Finance Bank , and others. Money can be transferred electronically in and out of the country. A new lawon private investment provides three to seven-year  tax holidays to eligible companies anda four-year exemption from exports tariffs and duties. As a result of the new banks in thecountry, Afghan expats are sending more money back home to their family or relatives.

According to a UN report in 2007, Afghanistan has received over $3.3 billion from itsexpatriate community in 2006. UN officials familiar with the issue said remittances toAfghanistan could have been more if the banking regulations are more convenient.[4] In2010, Kabul Bank became in financial crisis after depositors had withdrawn $180million.[31]

The UN continue to provide considerable humanitarian relief. Since its inception in 1991,the UN Office for the Coordination of Humanitarian Affairs (OCHA) to Afghanistan haschannelled more than $1 billion in multilateral assistance to Afghan refugees andvulnerable persons inside Afghanistan. The United States, the European Union (EU), andJapan are the leading contributors to this relief effort. One of its key tasks is to eliminate

from priority areas—such as villages, arable fields, and roads—some of the 5 to 7 millionland mines and 750,000 pieces of  unexploded ordnance, sown mainly during the Sovietoccupation, which continue to litter the Afghan landscape. Afghanistan is still a heavilymined country; mine-related injuries number about 60 per-month. Without successfulmine clearance, refugee repatriation, political stability, and economic reconstruction willbe severely constrained.

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The plan for Kabul's nine billion dollar future modern urban development project, theKabul - City of Light Development.

The Agency Coordinating Body for Afghan Relief reported in 2008 that the United Stateshas not delivered $5 billion worth of aid it pledged to help rebuild Afghanistan, and other donors have also fallen short by about the same amount. Since 2001, the internationalcommunity has pledged $25 billion in help but has delivered only $15 billion. Thereconstruction of Afghanistan requires a sustained and substantial commitment of aid.[32]

Too much money meant for Afghanistan aid is wasted, with a vast amount spent on

foreign workers' high salaries, security and living arrangements.[33]

An initial concept design called the City of Light Development, envisioned by Dr.Hisham N. Ashkouri, Principal of ARCADD, Inc. for the development and theimplementation of a privately based investment enterprise has been proposed for a multi-function commercial, historic and cultural development within the limits of the Old Cityof Kabul along the southern side of the Kabul River and along Jade Meywand Avenue,[34]

revitalizing some of the most commercial and historic districts in the City of Kabul,which contains numerous historic mosques and shrines as well as viable commercialactivities among and within war-damaged buildings. Also incorporated in the design is anew complex for a new Afghan National Museum. The design has garnered interest from

President Hamid Karzai, and has support from Ambassador Said Tayeb Jawad, whosigned a Memo of Understanding regarding the development.

Market place of Afghanistan

In May 2002, delegates from governments, international companies, and financialinstitutions met at a United Nations conference in Tehran to discuss the reconstruction of Afghanistan. Afghanistan's officials say that to create a viable economy and a stablesociety, the country must recreate basic infrastructures --and it requires foreigninvestment to do so. But will businesses want to invest in Afghanistan? CorrespondentBorzou Daragahi recently traveled to Afghanistan's business centers to see what life islike for the foreign entrepreneur.

KEY CONCEPTS

Benefit, Choice, Costs, Costs of Production  , Economic Growth  , Entrepreneur , Externalities, Incentive, Investment, Public Goods  , Role of Government  , Trade-off  

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STUDENTS WILL

• Describe devastated infrastructure of Afghanistan.• Explain the role of infrastructure in fostering economic growth.• Explain why entrepreneurs may choose not to do business in Afghanistan, despite

the many opportunities it offers.• Assess prospects for reconstruction in Afghanistan by reference to the role of 

stable government, rule of law, private property and infrastructure.

INTRODUCTION

What does it take for economies to grow? For someeconomies, foreign investment is a very important factor.Afghanistan is one country that would benefit greatly fromforeign investment. But its infrastructure was devastated in2002, and infrastructure problems have discouraged many

foreign investors from doing business there, thus preventingeconomic improvement. While Afghanistan provides onegood example of what is required for economic growth,other underdeveloped countries face very similar problems.The economic principles that help to explain Afghanistan's current situation may also beapplied in other cases.

Economy of Afghanistan 

123Independenceday » Afghanistan » Economy 

Basically, Afghanistan has been a war-torn country with ongoing military conflicts andpolitical instability affecting the economic growth of the country. The economy of 

Afghanistan can be categorized as poor and unstable as it lacks proper industrializationand absence of well-developed manufacturing and infrastructure facilities. Since

Afghanistan is a land locked country, majority of the region is uncultivable as they aresemi-arid and comprise of hilly terrains. One of the important aspects of Afghan

economy lies in the fact that it is totally dependent on foreign aid and assistance receivedmainly from the G-8 countries. The G.D.P growth has been 14% while inflation rate is

16.3%.

To know more about the economy of Afghanistan, here's sharing with you someinformation as---

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Agriculture and Natural Resources of Afghanistan---

Though Afghanistan is a vast country, yet only half of its area is fertile. However,agriculture is the main source of survival for majority of the Afghans living in the ruralareas. Nearly 2/3rd of its agricultural lands require irrigation facilities which are of course

available through preservation of rain water or through small springs or rivers. The major cash crops of Afghanistan are--- wheat, corn, rice and cotton, widely cultivated indifferent parts of the country. Moreover fruits and nuts are also exported far and widewhich inevitably serves as a major revenue for Afghanistan. Other varieties of fruits thatare widely grown are-- apricots, cherries, figs, mulberries, sweet grapes, melonspomegranates and raisins. It's important to note that Karakul sheep, a special variety of sheep found in Afghanistan are grazed in large numbers and the Karakul lambs arewidely used to make Persian lamb coats. An overview of the economy of Afghanistanremains incomplete without mentioning its wide and rich natural resources as-- naturalgas, zinc, petroleum, coal, chromites, talc, sulfur, copper lead, iron ore, barites, preciousand valuable stones.

Trade and Industries of Afghanistan---

Since the earlier times, the economic development of Afghanistan has hampered becauseof constant conflicts and war which has totally demoralized the phase of industrializationof the country. The large deposits of oil found in the Hindu Kush and in parts of northernAfghanistan were being utilized for various internal purposes and have also beenexported to other countries especially the bordering nations of Russia and Pakistan.Afghan handicrafts consisting of Afghan rugs, carpets, bridal embroidered works are ingreat demand in international market. There has not been much growth of factories inAfghanistan however; the capital city of Kabul houses some woolen and textile

manufacturing industries, footwear manufacturing houses and fruit-processing plants.In recent times, with the usherance of a new government slight economic upsurge havebeen witnessed with new industries being developed. Infrastructure facilities such asroads, rail communication and electricity have been upgraded to enhance a good livingstandard in Afghanistan.

Thus, the comprehensive economy of Afghanistan gives you a clear idea of the prevalenteconomic conditions in the country.

For more details on economy of Afghanistan flip through 123independenceday.com

.

Afghanistan ECONOMY 

In the 1930s, Afghanistan embarked on a modest economic development program. Thegovernment founded banks; introduced paper money; established a university; expandedprimary, secondary, and technical schools; and sent students abroad for education. Historically,there has been a dearth of information and reliable statistics about Afghanistan's economy. The

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1979 Soviet invasion and ensuing civil war destroyed much of the country's limited infrastructureand disrupted normal patterns of economic activity. Gross domestic product fell substantiallybecause of loss of labor and capital and disruption of trade and transport. Continuing internalstrife hampered both domestic efforts at reconstruction as well as international aid efforts.However, Afghanistan's economy has grown at a fast pace since the 2001 fall of the Taliban,albeit from a low base. GDP growth exceeded 12% in 2007 and 3.4% in 2008; growth for 2009-2010 was 22.5%. Despite these increases, unemployment remains around 40% and factors suchas corruption, security, and shortage of skilled workers constrains development and the conductof business. In June 2006, Afghanistan and the International Monetary Fund agreed on a PovertyReduction and Growth Facility program for 2006-2009 that focused on maintainingmacroeconomic stability, boosting growth, and reducing poverty. Afghanistan is also rebuilding itsbanking infrastructure through the Da Afghanistan National Central Bank.

AgricultureAn estimated 85% of Afghans are dependent on agriculture and related agribusinesses for their livelihoods. Opium poppy production and the opium trade continue to have a significant monetaryshare of the country’s agricultural economy. However, both this share and the number of farmersgrowing poppy continue to decline, as more farmers are taking advantage of opportunities toproduce and market alternative crops. Licit commercial agriculture is playing a significant role inincreasing the income of rural populations. The major food crops produced are: corn, rice, barley,

wheat, vegetables, fruits, and nuts. The major industrial crops are: cotton, tobacco, madder,castor beans, and sugar beets. Agricultural production is constrained by an almost totaldependence on erratic winter snows and spring rains for water; irrigation is primitive. Relativelylittle use is made of machines, chemical fertilizer, or pesticides.

Afghan farmers need financing to buy quality seeds, fertilizer, and equipment. The United Statesand the international community are helping to restore banking and credit services to rurallenders, which now administer loans in nearly two-thirds of the country’s provinces. As of September 2009, more than 52,300 agricultural loans ranging from approximately $200 to $2million had gone to small businesses, with a repayment rate of 94%. Of these, 49% of loans hadgone to women-owned businesses, and 27,700 borrowers were women. The program’s successhas encouraged commercial banks to extend revolving loans for agribusinesses. Funds havebeen provided for leases and to promote agro-processing and support for crop exports.

In 2009, the United States significantly revised its counter-narcotics strategy for Afghanistan,ending direct involvement in eradication of poppy and increasing support for licit agriculture andinterdiction. The new strategy puts heavy focus on going after those targets where there is astrong nexus between the insurgency and the narcotics trade, to deny resources to the Taliban.Poppy is easy to cultivate and opium is easily transported. Afghanistan produced a record opiumpoppy crop in 2007, supplying 93% of the world's opium. Much of Afghanistan's opium productionis refined into heroin and is either consumed by a growing regional addict population or exported,primarily to Western Europe.

Trade and IndustryAfghanistan is endowed with natural resources, including extensive deposits of natural gas,petroleum, coal, copper, chromite, talc, barites, sulfur, lead, zinc, iron ore, salt, and precious and

semiprecious stones. Unfortunately, ongoing instability in certain areas of the country, remote andrugged terrain, and an inadequate infrastructure and transportation network have made miningthese resources difficult, and there have been few serious attempts to further explore or exploitthem. The first significant investment in the mining sector is expected to commence soon, withthe development of the Aynak copper deposit in east-central Afghanistan. This project tender,awarded to a Chinese firm and valued at over $2.5 billion, is the largest international investmentin Afghanistan to date. The Ministry of Mines also plans to move forward with oil, gas, andpossibly iron ore tenders in 2010.

The most important resource has been natural gas, first tapped in 1967. At their peak during the

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1980s, natural gas sales accounted for $300 million a year in export revenues (56% of the total).Ninety percent of these exports went to the Soviet Union to pay for imports and debts. However,during the withdrawal of Soviet troops in 1989, Afghanistan's natural gas fields were capped toprevent sabotage by the mujahidin. Restoration of gas production has been hampered by internalstrife and the disruption of traditional trading relationships following the collapse of the SovietUnion. In addition, efforts are underway to create Reconstruction Opportunity Zones (ROZs).ROZs stimulate badly needed jobs in underdeveloped areas where extremists lure fighting-ageyoung men into illicit and destabilizing activities. ROZs encourage investment by allowing duty-free access to the U.S. for certain goods produced in Afghanistan.

TransportationRestoration of the “Ring Road” that links Kabul, Kandahar, and Herat with the northern cities of Mazar-e-Sharif and Kunduz continues. Much of the road has now been completed, includingeconomically vital stretches linking Kabul, Kandahar, and Herat.

Landlocked Afghanistan has no functioning railways, but the Amu Darya (Oxus) River, whichforms part of Afghanistan's border with Turkmenistan, Uzbekistan, and Tajikistan, has bargetraffic. During their occupation of the country, the Soviets completed a bridge across the AmuDarya. The Shirkan Bandar bridge, reconstructed with U.S. assistance, reopened in 2007 andhas opened vital trade routes between Afghanistan and Tajikistan.

The Hairatan to Mazar-e-Sharif railway project is also in progress. The project aims to increasetrade between Afghanistan and Uzbekistan, reduce transport costs, increase vehicle operationsavings, and create job opportunities in the project area. It will improve Hairatan's marshalingyard and railway station, construct a new single-track railway line of about 75 km from Hairatan toMazar-e-Sharif, construct a new transshipment terminal facility at Mazar-e-Sharif, install signalingand telecommunication systems, install safety features for efficient operation, develop institutionalcapacity of the railway sector, and provide construction supervision and project managementconsultancy.

Afghanistan's national airline, Ariana, operates domestic and international routes, including flightsto New Delhi, Islamabad, Dubai, Moscow, Istanbul, and Tehran. Civil aviation has beenexpanding rapidly and several private airlines now offer an alternative to Ariana and operate a

domestic and international route network. The first, Kam Air, commenced domestic operations inNovember 2003.

Power For nearly 3 decades, the availability of secure energy supplies in Afghanistan was significantlydisrupted by conflict. Much of the country's power generation, transmission, and distributioninfrastructure was destroyed, and what remained was stretched far beyond capacity. More than90% of the population had no access to electricity. In January 2009, with the help of the AsianDevelopment Bank and the Indian Government, electricity began to flow into Kabul along a newlyconstructed transmission line running from neighboring Uzbekistan. For the first time in more thana generation, the majority of the capital's 4 million people enjoy the benefits of power. In 2001,Afghanistan produced 430 megawatts of electricity. Today the country produces more than 754megawatts. International statistics maintained by the World Bank indicate the ratio of gross

domestic product (GDP) growth to electrical production is approximately $1,000 to 300 kwh. TheAfghan Government's current power plan sets a goal to deliver sufficient electricity to meet theneeds of an economic growth rate of 9% per year. Additionally, the Afghan Governmentanticipates approximately 90% of urban businesses will have access to electrical power by theend of 2010. Finally, the plan's objective is to provide access to electricity to 65% of urban and25% of rural households by the end of 2010.

The United States has provided considerable assistance to help develop new electricitygeneration capacity and provide 24-hour power in key cities including Kabul, Lashkar Gah, andKandahar. Major projects carried out include refurbishment of power generation capacity at Kajaki

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Dam in the south and opening the Kabul power plant. Under the U.S. and partners’ supervision,the Afghan Government has transferred all assets, liabilities, and personnel from the troubled,state-run power utility Da Afghanistan Breshna Mosesa (DABM) to the new corporatized nationalelectricity utility Da Afghanistan Breshna Sherkat (DABS). The move was a significantbreakthrough in Afghan Government and donor efforts to modernize and begin to commercializethe national electricity sector.

Reliable, affordable electricity is vitally important to Afghan economic growth, prosperity, andstability. The energy infrastructure continues to be a priority for the U.S. and other donor nations.

DeminingLandmines and other explosive remnants of war affect virtually every province in Afghanistan, atragic legacy of nearly 3 decades of continuous conflict. On average, according to the LandmineMonitor program, as many as 83 people are injured or killed each month in Afghanistan by thesehidden hazards, with children involved in more than half of these incidents. As in many countriesstruggling to recover from conflicts, landmines and unexploded ordnance inhibit development,disrupt markets and production, prevent the delivery of goods and services, and generallyobstruct reconstruction and stabilization efforts. Removing these deadly hazards enables socio-economic development that could further the larger goal of promoting stability and security inAfghanistan and the wider region.

Many Afghan non-governmental organizations (NGOs) such as Organization for Mine Clearanceand Afghan Rehabilitation (OMAR), Afghan Technical Consultants (ATC), Demining Agency for Afghanistan (DAFA), Mine Clearance Planning Agency (MCPA), and Mine Detection Center Afghanistan (MDC) have hard-won demining expertise and experience. The United States workswith a wide array of international partners in mine action efforts in Afghanistan, but the majority of U.S. financial assistance for demining in Afghanistan goes directly to Afghan-run NGOs, whichhave pioneered an approach called “community-based demining.”

In community-based demining, Afghan NGOs recruit, train, and employ local workers, in closepartnership with community leaders, to survey and clear explosives. Training local Afghandemining technicians offers a new skill, allowing the country to build self-sufficient capabilities tocontinue resolving its own issues, as well as lend support to other countries recovering from

conflict in the future.

Community-based demining represents a new and unique opportunity to link Afghan and U.S.humanitarian, development, and counterinsurgency objectives. It furnishes jobs that keep youngmen employed, establishes trust with local leaders, and enables local personnel to participate intaking back their community, thus reinforcing local governance and reducing insurgent influence.

Since 1993, the United States has provided more than $165 million for humanitarian mine actionin Afghanistan, making it the largest international donor to Afghanistan for this type of assistance.International and Afghan partners have used these funds to clear more than 160 million squaremeters of land and are now extending these efforts through community-based demining.

Refugees and Internally Displaced People

Afghanistan has had the largest refugee repatriation in the world in the last 30 years. Over 5million Afghan refugees have returned to the country since 2002, with 4.4 million receivingrepatriation assistance from the United Nations High Commissioner for Refugees (UNHCR). TheMinistry of Refugees and Repatriation (MORR) leads the Government of the Islamic Republic of Afghanistan in assisting its citizens in returning from exile. The UNHCR leads the internationalcommunity's response, in coordination with the International Organization of Migration (IOM),United Nations Children's Fund (UNICEF), the World Food Program (WFP), the World HealthOrganization (WHO), and a number of other national and international NGOs and donors.

In February 2009, UNHCR reported 235,833 internally displaced people (IDPs) in the country.

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The United States channels a significant amount of aid to refugees, returnees, IDPs, and other vulnerable conflict victims through agencies such as UNHCR, the international Committee of theRed Cross (ICRC), the World Food Program, and numerous non-governmental organizations.The U.S. also supports various organizations in providing assistance and protection to the 3.6million Afghan refugees residing outside Afghanistan. While anchoring returnees in Afghanistanwill remain a priority for U.S. assistance programs, the U.S. will also continue to support refugeeassistance and protection inside countries of asylum. Since September 2001, the United Stateshas contributed over $718 million to these programs.

HealthAfghanistan has one of the highest mortality rates in the world: one in five children dies before theage of five and one out of every eight Afghan women die from causes related to pregnancy andchildbirth each year. Life expectancy is only 44 years for both men and women. While thesestatistics are tragic, there has been progress. Recent reports indicate that 85% of the populationhas access to basic health services within 1 hour of travel to a health facility (68% for those onfoot)--up from 9% in 2002. More than 1,650 professional midwives are employed by the ministryof public health, providing health care and childbirth services across Afghanistan. This has helpedreduce infant mortality rates by 23%, saving 80,000 newborn lives each year. Child mortality hasalso fallen; down 26% since 2002. The U.S. through various agencies and in conjunction with theAfghan Government has implemented health programs to help meet the immediate health care

needs of the population by strengthening the health care service delivery system; addressing themanagement leadership and stewardship capacity of the Afghan health care system at thecentral, provincial, district, and community levels; and increasing demand for and access toquality health products and services through the private sector--60% of the population receivehealth care from the private sector.

Insecurity along the border, especially in the south, has led to a lack of health workers and anincrease in polio cases from seven in 2004 to at least 24 in 2009. The U.S. supports the nationalPolio Eradication Initiative to strengthen Afghanistan’s immunization communication, servicedelivery, and surveillance networks. As a result of this assistance, more than 7 million Afghanchildren, or 90% of children under the age of five, have been vaccinated against polio. The UnitedSates also supports tuberculosis (TB) detection, treatment, and control efforts in 13 targetprovinces using the Directly Observed Therapy, Short Course (DOTS) methodology. Globally

recognized as the best way to cure TB and control its spread, DOTS is a 6- to 8-month programin which health providers directly administer medication and closely monitor patient progress.

To strengthen the private sector and foster best practices, the U.S. is supporting private hospitals,pharmacists, and pharmaceutical manufacturers in the development of professional associations.

EducationAfghanistan has made impressive advances in increasing basic education. More than 10,000schools are providing education services to 6.3 million children, a six-fold enrollment growth since2001. During the Taliban regime no girls were registered in schools. Today, 36.3% of the studentpopulation is girls. Similarly, the number of teachers has increased seven-fold to 142,500, of whom nearly 40,000 are women.

Adult literacy activities increased rapidly in 2009. Learning centers grew from 1,100 to 6,865, andactivities expanded from 9 to 20 provinces, bringing literacy and financial services to over 169,000 beneficiaries (62% female). From a situation of total illiteracy, these learners can nowread, write, form simple sentences, and do basic mathematical calculations. Ongoing support of literacy and basic education is paramount, as well as the quality and preparation of teachers inorder to close the literacy gap left by 30 years of conflict.

EconomyGDP (2009 est., purchasing power parity): $27 billion.GDP growth: 22.5% (2009-2010); 11% (2010-2011).

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GDP per capita (2009 est.): $800.Natural resources: Natural gas, oil, coal, petroleum, copper, chromite, talc, barites, sulfur, lead,zinc, iron ore, salt, precious and semiprecious stones.Agriculture (estimated 31% of GDP): Products--wheat, opium, sheepskins, lambskins, corn,barley, rice, cotton, fruit, nuts, karakul pelts, wool, and mutton.Industry (estimated 26% of GDP): Types--small-scale production of textiles, soap, furniture,shoes, fertilizer, cement; hand-woven carpets; natural gas, coal, and copper.Services (estimated 43% of GDP): Transport, retail, and telecommunications.Trade (2009 est.): Exports--$547 million (does not include opium): fruits and nuts, hand-wovencarpets, wool, cotton, hides and pelts, precious and semiprecious gems. Major markets--CentralAsian republics, United States, Russia, Pakistan, India. Imports--$5.3 billion: food, petroleumproducts, textiles, machinery, and consumer goods. Major suppliers--Central Asian republics,Pakistan, United States, India, Germany.Currency: The currency is the afghani, which was reintroduced as Afghanistan's new currency inJanuary 2003. At present, $1 U.S. equals approximately 50 afghanis.

Growth in Afghanistan

Afghanistan's Recent Economic Performance

Afghanistan’s economy saw record real GDP growth in 2009/10 at 22.5 percent.Since 2002/03 the country has seen average growth rates in the double digits, but withgreat volatility because of its heavy reliance on agriculture, which is subject to weather fluctuations. Even with an uncertain and deteriorating security situation, strong outputwas driven by increased donor spending – a 24 percent increase in core budget donor grants and about US$ 4 billion in off-budget donor funding – and recovery from thesevere drought of 2008/09. Last year’s harvest led to agriculture output growth of 36percent (constant 2002/03 prices) and the non-agricultural component of 14 percent.

Private consumption has been the primary driver of economic growth over the past

half-decade. Behind consumption growth, is the security economy that generates demandfor goods and services, equipment and operations and maintenance of the national army,as well as higher spending by donors, and their large off-budget contributions. In2009/10, private consumption contributed 22.1 percent points of the 22.5 percent realgrowth (while net exports represented -5.7 percentage points). Consequently, governmentspending contributed relatively little to GDP – just 3 percentage points. Furthermore,investment has been dynamic, showing moderate growth over the years and contributingaround 4 percentage points to GDP growth, mostly from the external budget capitalspending and private investment in the security economy.

Much of private consumption is directed towards services. In 2009/10 and in the pastfive years, services contributed about half of output (and over 10 percentage points of the22.5 percent real growth – Figure B). The most dynamic services subsectors have beenCommunications (45 percent annual growth), Finance & Insurance (27 percent) and

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Transport (22 percent), with Wholesale and Retail trade lagging at a marginal 4 percentgrowth. In addition, Agriculture contributed 7.3 percentage points, driven mainly by agood cereal harvest and livestock. The sector’s output has been volatile becauseAfghanistan’s arable land and most irrigation systems depend on seasonal rain and snow.Furthermore, Industry contracted by 3 percent over last year, due largely to weaker 

manufacturing, that contracted by 12 percent. In addition, Construction contributed 1.86percentage points, while mining added only a marginal at 0.11 percent of last year’s GDPgrowth.

However there are a number of economic indicators suggesting that Afghanistan is

on an unsustainable growth path. The country is highly aid dependent with foreign aiddisbursements of 47 percent of GDP in 2008/09. Only little is produced for exportpurposes while the country depends heavily on imports for reconstruction and food. The

same financial year, private investment only reached 8 percent of GDP, while totalinvestment was 32 percent of GDP. Another major concern is the fact that gross revenuesfrom opium trade are estimated to be equivalent to as much as third of measured GDP(opium is not reflected in the official GDP numbers). Afghanistan is the source of 93percent of the world’s opium production and the area under cultivation more thandoubled from 2003 to 2007. This context implies the need for a medium term strategybased on alternative sources of sustained growth in Afghanistan.

Great hope is being placed on the development of the mining sector. At present, themining sector’s contribution to GDP is marginal, at less than 0.3 percent. Two decades of war, chronic neglect, and severe under-funding have limited the development of this

sector. But two recent large scale investments at Aynak and Hajigak could mark afundamental shift. It is estimated that Afghanistan has substantial, untapped mineraldeposits which have the potential to make it to a major exporter of minerals. While thereare many uncertainties about the actual benefits that would accrue to the country frommining, there is little doubt that the sector, if managed well, could be the main driver of growth in the years to come.

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However, the development of the mineral sector risks of further burdening the

country’s fragile governance. Moreover, mining is pre-dominantly a capital-intensiveactivity which will only generate a limited number of jobs. Unless linkages to other economic sectors are strengthened, mining development is unlikely to bring relief to thepoor and vulnerable population in Afghanistan.

Ongoing analytical work at the World Bank:

In an attempt to better understand constraints and drivers of growth, the World Bank iscurrently preparing two analytical reports addressing the challenges the Government anddevelopment partners will face in the medium and long term. The report Sustainability of State Building in Afghanistan will look at the current degree of fiscal and capacityreliance of the state on external resources. It will use scenario planning to gain a better understanding of fiscal and institutional sustainability over the next 10 years with view tobetter understanding the implications of aid flows on service delivery.

The report Economic Growth in Afghanistan will explore the long term drivers of growthin the absence of the market distortions resulting from the security situation. It will dealwith the question of how Afghanistan can foster private sector development, agricultureand rural development, as well as ensure that emerging mineral wealth translates into asource of sustainable and inclusive growth.

Foreign aid or (development assistance) is often regarded as being too much, or wastedon corrupt recipient governments despite any good intentions from donor countries. Inreality, both the quantity and quality of aid have been poor and donor nations have notbeen held to account.

In 1970, the world’s rich countries agreed to give 0.7% of their gross national income asofficial international development aid, annually. Since that time, despite billions giveneach year, rich nations have rarely met their actual promised targets. For example, the USis often the largest donor in dollar terms, but ranks amongst the lowest in terms of meeting the stated 0.7% target.

Furthermore, aid has often come with a price of its own for the developing nations:

• Aid is often wasted on conditions that the recipient must use overpriced goodsand services from donor countries

• Most aid does not actually go to the poorest who would need it the most•

Aid amounts are dwarfed by rich country protectionism that denies market accessfor poor country products, while rich nations use aid as a lever to open poor country markets to their products

• Large projects or massive grand strategies often fail to help the vulnerable; moneycan often be embezzled away.

This article explores who has benefited most from this aid, the recipients or the donors.

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Beginning of Transition in Afghanistan

Means End to Business as Usual,

Secretary-General’s Special

Representative Tells Security Council

 

In Debate on Situation, Afghanistan’s Ambassador Says Country on Path to Full

Sovereignty but ‘Cannot Stand on Its Own Two Feet’ with Weak State Institutions

The Secretary-General’s Special Representative for Afghanistan called for fullinternational support to the planned transition to Afghan responsibility for security,governance and development in the troubled country as he addressed the SecurityCouncil this morning during a debate on that situation.

The beginning of the transition this year, expected to commence with next week’sannouncement by President Hamid Karzai of areas under full Afghan responsibility,meant an end to “business as usual”, stressed Staffan de Mistura, who is also the head of United Nations Assistance Mission in Afghanistan (UNAMA), as he introduced theSecretary-General’s latest report (see Background). In the effort to restore full Afghansovereignty, the international community must go far beyond security to comprehensivecapacity-building and development efforts.

He said that the review of UNAMA requested by the Afghan Government was anopportunity to ensure the effectiveness of United Nations support in those endeavours inthe coming period. In security, Afghan forces must consolidate their gains and earn thefull confidence of the Afghan people, amid the surge in violence.

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As provinces came under full Afghan governance and security during thetransition, they must be rewarded with adequate development assistance and not beabandoned, he said. Noting that sovereignty came with increased responsibility andaccountability, he maintained that institutional progress had been made towards that end.

He stressed the magnitude of the activities of the entire United Nations in a broadrange of areas, including human rights, governance, rule of law, humanitarian assistance,institutional capacity-building and development. Millions of Afghans were benefitingfrom those activities, and it must be assured that they would not be abandoned once thetransition was over. He appealed for more assistance in building the Government’scapacity to fight the illicit drug trade.

The representative of Afghanistan introduced the request submitted by hisGovernment (again see Background) for a comprehensive review of UNAMA’s mandate,greater coherence in the United Nation’s work and reshaping of its mandate, due toexpire on 23 March, around the transition to full Afghan assumption of its responsibilityin the country. “ Afghanistan cannot stand on its own two feet if its State institutionsremain weak and are undermined by various parallel structures, and if capacity is notstrengthened,” he said.

He said his country was on the path to full sovereignty, national ownership and

leadership in an effort to realize the goal of a democratic, secure and prosperous nationthat could meet the needs of its citizens independently. While that would be no easy task,he said, the Government and people were completely committed to it, and, with the helpof the international community, the transition would be completed and the goals of theAfghan people would become a reality.

Stressing also the need to end the continuing violence, he said that the protectionof civilians must be the first priority, including greater measures to prevent civiliancasualties by all forces. In addition, he said that all stakeholders had come to realize that

war and violence could not end through military means alone. That was why theGovernment continued to reach out to all those who wanted to join the peace process.The support of the international community was essential to ensuring the success of thatprocess.

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Following those statements, Security Council members and the representatives of other interested countries strongly supported a transition to full Afghan responsibility, aswell as related aspects of the so-called “ Kabul process”. In that effort, most prioritizedcapacity-building of Afghan institutions, particularly those related to security and rule of law, as well as to other services for the Afghan people. Some said that their countries

would funnel more aid through Afghan institutions.

While all speakers addressed the urgent need for security, particularly theprotection of civilians, the Head of Delegation of the European Union, among others,stressed a comprehensive vision of security in Afghanistan, encompassing goodgovernance, human rights, development and an inclusive political process. Mostspeakers also supported an Afghan-led reconciliation process, although some cautionedthat only those who renounced violence should be included.

In that context, Pakistan’s representative supported the visit of the Chairman of the High Peace Council to Pakistan and the recent meeting of the International ContactGroup in Jeddah, as well as the High Peace Council’s interaction with the United Nationsand the Organization of the Islamic Conference. The Security Council, he added, shouldbe a willing partner of the Afghan people in the important and delicate reconciliationprocess.

For its part, Pakistan was extending the fullest security and intelligencecooperation to Afghanistan, with the number of its military and paramilitary personneldeployed along the border greater than all international troops in the country. “We do notwant Afghanistan to become a theatre of proxy wars or descend into chaos andinstability,” he stressed.

Throughout the course of the meeting, many speakers also expressed solidaritywith the people and Government of Japan following the devastation of the recentearthquake and tsunami.

Also speaking this morning were the representatives of Germany, Lebanon, SouthAfrica, United States, Portugal, India, Nigeria, United Kingdom, France, Gabon, RussianFederation, Colombia, Brazil, Bosnia and Herzegovina, China, Italy, Japan, NewZealand, Norway, Turkey, Canada, Iran and Australia.

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The meeting began at 10:15 a.m. and ended at 1:30 p.m.

Background

The Council had before it the report entitled: The situation in Afghanistan and itsimplications for international peace and security (document SC/2011/120), which coversdevelopments in the country, as well as the activities of the United Nations AssistanceMission there, known as UNAMA, since 10 December 2010.

In the report, the Secretary-General recommends that UNAMA’s mandate beextended for another year, saying the Mission will continue to support the so-called “Kabul process” that spells out a transition to greater Afghan responsibility andownership, in both security and civilian areas. He says his approach to the Kabul processand transition is based on three key principles — the transition must be Afghan-owned, itmust be planned and implemented in a sustainable manner and it must ensure theprotection and promotion of the rights of all Afghans.

He adds that the United Nations system in Afghanistan can complement and bringadded value to the efforts of the Afghan International Security Assistance Force (ISAF)in specific sectors, such as local mediation and conflict resolution support; advocacy andmonitoring of human rights; technical assistance to Afghan capacity-building for deliveryof basic services and management of natural disasters, within the limits of availablefunding and resources provided to members of the United Nations country team.

He says that focus will be on those locations where there are needs and wheresecurity and access conditions will allow the United Nations to maximize its efforts and

reinforce its presence. The Organization will also continue to pursue a “One UnitedNations” approach and strengthen the coherence of its efforts in Afghanistan, he adds.

In his observations, Mr. Ban also outlines obstacles facing the Afghan transition,including tension between the executive, legislative and judiciary branches over the statusof parliament. If this continues much longer, or if it leads to an entrenched political

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crisis, it will be detrimental to the credibility, effectiveness and inclusiveness that isnecessary for the Government of Afghanistan to lead the transition process, he says.

He also says there were “significant flaws in the election process”, but adds thatthey were neither “unexpected nor unprecedented”, maintaining that the electoralinstitutions performed commendably under difficult circumstances. He adds that there isalso no question that the result, which was a reflection of the patterns of instability in thecountry, created a parliament where the Pashtun population in some areas is apparentlyunderrepresented compared to the previous parliament.

He calls for the problem to be addressed in a manner that will not have adverseconsequences for the transition process and the future stability of Afghanistan. His

Special Representative to Afghanistan and head of UNAMA, Staffan de Mistura, hasbeen working closely with all parties to find an appropriate solution, while stressing thatthe solution should not be achieved at the expense of the electoral institutions, theconstitutional separation of powers, the confidence of the international community, or that of the Afghan people, the Secretary-General writes.

The second immediate challenge to the implementation of the Kabul process isthe current impasse over the Kabul Bank. The Secretary-General says that thecontroversy has implications for the prospect of international partners aligning assistance

with Afghanistan’s national priority programmes.

On security, the report says that the number of security incidents, mainly armedclashes and the use of improvised explosive devices, remain significant, with1,664 incidents in January 2011, compared to a monthly average of 1,620 in 2010, and960 in 2009. At the end of 2010, suicide attacks remained at an average of 2.8 per week compared to the weekly average of 2.6 through 2009.

Abductions and assassinations, according to the report, continued through the lasttwo months of 2010 and into January 2011. The southern city of Kandahar and itssurrounding areas remained the focus of such incidents, with 20 suicide attacks and33 assassinations occurring in the city, which is also the focus of activity for the Afghannational security forces and the ISAF.

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The Council also had before it the Annex to the note verbale dated 4 March 2011 from the Permanent Mission of Afghanistan to the United Nations addressed to theSecretary-General (document S/2011/118), conveying a request of the AfghanGovernment to renew UNAMA’s mandate for an additional 12 months beyond 23 March,and requesting a comprehensive review of that mandate in the next six months, consistent

with principles outlined in the Kabul and London communiqués, which seek to restoreAfghan ownership of security, governance and development.

In that light, the Government requests that the new mandate make its central focusthe restoration of full Afghan responsibility in those areas by 2014, along with thepromotion of coherence in the international community’s support for that effort, whileretaining UNAMA’s formal role as the co-chair of the Joint Coordination and MonitoringBoard.

In that context, the Government says that increased focus should be given tochannelling aid through the Afghan budget and recalibrating UNAMA’s role inimproving civil-military coordination with ISAF. It underscores the need for Afghanleadership in reconciliation and reintegration efforts with the support of UNAMA’s goodoffices, if requested. It stresses that, while the Government is committed to the electoralreform process as reflected in the Kabul communiqué, the implementation of that reformis the responsibility of the Afghan Government and, therefore, it is not necessary to makereferences to it in the new UNAMA mandate.

UNAMA’s adjusted role during the transition, according to the annex, could bebest fulfilled by limiting its offices to the six recognized zones throughout the country,subject to the requested review. UNAMA’s support for improving governance and therule of law would be achieved best through strengthening the efforts of the Governmentin accordance with the Kabul process, it states. The Government maintains it is notnecessary to refer to UNAMA’s activities at the subnational level in the mandate and thusit should be considered instead in the context of transition.

UNAMA should have a coordinating role in facilitating the delivery of humanitarian assistance in accordance with humanitarian principles, but theGovernment’s role should again be central, it states. United Nations development andhumanitarian activities should be geared towards “One United Nations”. In conclusion,the Government looks forward to maintaining close contact to finalize UNAMA’smandate for this year, as well as conducting the aforementioned review. It reiterates itsdeep gratitude for the steadfast support of the international community.

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Statement by Afghanistan

ZAHIR TANIN ( Afghanistan) said that his country was on the path to fullAfghan sovereignty, national ownership and leadership in an effort to realize the goal of ademocratic, secure and prosperous nation that could meet the needs of its citizensindependently. While the Government was well aware that that would be no easy task,the Government and people were committed to it, and, with the help of the internationalcommunity, the transition would be completed and the goals of the Afghan people wouldbecome a reality.

He said that the full logic of the transition would roll out over the next four yearsand the people would benefit from a secure, democratic society governed by the rule of law. The international community’s support would be critical, and all stakeholders, incarrying out their role over the next four years, must be focused on helping theGovernment meet the needs of the transition. On the eve of the renewal of UNAMA’smandate, he stressed that the Mission’s work, as the lead international civiliancoordinator in the country, would be crucial in the next four years and beyond.

“ Afghanistan cannot stand on its own two feet if its State institutions remain

weak and are undermined by various parallel structures, and if capacity is notstrengthened,” he continued, emphasizing that securing Afghanistan was first andforemost about Afghan ownership and leadership. It was also about operating effectivelyto archive sustainable process. He then set out the Afghan Government’srecommendations on how UNAMA’s mandate would evolve during the coming transitionperiod, noting that a detailed letter had been sent to the Secretary-General on behalf of the Government towards that end.

Primarily, the Government called for a comprehensive review of the mandate and

the role of the United Nations in Afghanistan to be conducted in the next six months.The Government had agreed that that should be carried out before the Bonn conference atthe end of 2011. Among the other recommendations set out in the letter, the Governmenthad called for strengthening coherence and coordination among all United Nationsagencies and programmes working in the country; “reshaping UNAMA’s mandate to thetransition” as that process must be a central focus to facilitate a smooth shift to Afghanownership and leadership; channelling aid through the Afghan budget and better aligning

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it with the country’s priority programmes; and recalibrating ISAF’s role in line with thetransition.

He said that UNAMA’s coordinating role was crucial and, going forward, thatrole must meet the needs of the Government. Such an alignment of priorities wouldmake the United Nations operations in Afghanistan more efficient in the years to comeand help build and sustain a Government that functioned with greater confidence andself-reliance — not overnight but over time. The enduring partnership would remaincrucial; the transition was not the end but rather the beginning of a new chapter in anevolving partnership between the Afghan Government and the international community.

“We must end the war and violence in Afghanistan. The time has come to ensure

that Afghans have the chance to live in peace, free from the threat of the violence andsufferings they have endured for so many years,” he declared, stressing that the war against terrorism would not be won without the confidence and support of the Afghanpeople. While most of the civilian casualties were caused by Al-Qaida, incidences of lossof life during military operations had increased. The protection of civilian lives “must bepriority number one”. Loss of civilian life must end, he reiterated, and more measuresmust be put in place to ensure that. All stakeholders had come to realize that war andviolence could not end through military means alone. That was why the Governmentcontinued to reach out to all those who wanted to join the peace process. The support of the international community was essential to ensuring the success of that process.

Briefing

STAFFAN DE MISTURA, Special Representative of the Secretary-General andHead of the United Nations Assistance Mission in Afghanistan, introducing theSecretary-General’s latest report (see Background) said that all the activities of the lastyear had pointed to the importance of a transition to full Afghan responsibility andownership of its own governance, security and development efforts. He said that the

review of UNAMA requested by the Afghan Government was an opportunity to ensurethe effectiveness of United Nations support in that endeavour. In security, Afghan forcesmust consolidate their gains and earn the full confidence of the Afghan people, amid theraging surge in violence.

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As provinces were scheduled to come under full Afghan governance and securityduring the transition, those must be rewarded with adequate development assistance andnot be abandoned, he said. In addition, he stressed the responsibility of Afghan centraland local government, noting that sovereignty came with increased responsibility andaccountability and maintaining that political progress had been made towards that end.

Reporting on the meeting of the international contact group, he said it endorsedAfghan-led peace activities, as well as transitional progress through the so-called Kabulprocess. Civilian casualties were a great source of concern, with 9,000 having perishedin recent years. An opportunity had been given to the anti-Governmental forces toparticipate in the surveys on civilian casualties, but that offer had not yet been accepted.He said that vulnerable groups, including women and girls must be protected andsupported.

He stressed the magnitude of the activities of the entire United Nations in a broadrange of areas including human rights, governance, rule of law, humanitarian assistance,institutional capacity-building and development. Millions of Afghans were benefitingfrom those activities, and it must be assured that they will not be abandoned once thetransition was over. Progress in the illicit drug trade had been made by the Government,but the situation was still of great concern. He appealed for more assistance in buildingcapacity in the Government to ensure greater progress this year.

In conclusion, he said that every year was crucial in Afghanistan, but some yearswere more crucial than others. The transition this year meant that business as usual couldno longer be conducted. With the full restoration of Afghan sovereignty, theinternational community must go far beyond security to comprehensive developmentefforts. The United Nations had been in Afghanistan for many years and would continueto support the country after the transition.

Statements

PETER WITTIG ( Germany) said that Afghanistan was a national foreign policyfocus for his Government and he looked forward to working with the Council on thematter as Afghanistan entered into a phase of full transition. That was a move towards“real Afghan power”, but transition did not mean an end to international engagement, butmerely a change in that relationship. The international community’s focus must be on

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training and support so that the gains made during the transition could be sustained.Germany was concerned that the technical capacity to carry out all the objectives of thetransition were not yet in place, especially in areas where the process was set to beginearly. He encouraged the Government to be aware of that fact and work to bolster suchcapacity, including with UNAMA’s assistance. He also called for a resolution of the

difficulties regarding Parliament’s status.

He said that a recent United Nations Development Programme (UNDP) reporthad noted the increased confidence of the people of Afghanistan in their Government. Atthe same time, he called on Afghan authorities to do more to empower Afghan womenand to integrate them into all processes under way in the country. Meanwhile, theincreasing number of civilian casualties was a cause for serious concern and must beaddressed as a matter of urgency. Germany favoured the extension of UNAMA’smandate for another 12 months and was pleased with the wide support for Afghanistan in

the Council. Yet, he agreed with Afghan officials that at times, the amount of international goodwill could undermine Afghan solutions to Afghan problems.Therefore, he supported a review of UNAMA’s mandate over the next year, as soon asthe Council was able to evaluate the status of the transition. The Bonn conference at theend of the year had been scheduled to facilitate that aim.

CAROLINE ZIADE ( Lebanon) agreed that the transition phase should be led bythe Afghan Government and people. Following the free elections that had taken place inthe country, she said all efforts should be made to ensure that the progress that flowed

from that exercise continued apace, while challenges and setbacks were avoided. Theremust be greater support for the Electoral Commission, as well as a strengthening of awareness-raising and capacity-building. The international community must bolster support for national reconciliation, as well as all the objectives of the Bonn and Kabulprocesses.

She condemned the ongoing killing of civilians and called on all actors in thecountry to abide by their international law obligations. She was also concerned aboutongoing discrimination of women and recruitment of minors into combat forces, and

called for an end to those practices, as well as to sexual violence against women andminors. Lebanon reaffirmed the importance of regional cooperation as a key tostrengthening Afghan internal reconciliation, combating regional drug trade andimproving the nation’s economic conditions.

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BASO SANGQU ( South Africa) welcomed the relatively positive developmentsof the past few months in Afghanistan but expressed concern over continuing challenges,including the continuing violence. A comprehensive strategy including security, goodgovernance and development was required. He underscored UNAMA’s central role insupporting the Government and coordinating assistance. In addition, political dialogue

was needed, including among all those who were willing to contribute to peace inAfghanistan. He agreed with the Secretary-General’s views on the issue and called on allstakeholders to achieve national reconciliation.

He was dismayed by growing civilian casualties, and called on all concerned toprevent them. He expressed particular concern over the plight of children and women,calling for assurances that no child soldiers would be used and for measures to protectwomen and involve them in all processes. Counter-narcotic efforts were also crucial.Most important was the transition to Afghan ownership of all efforts. He reaffirmed

support for UNAMA and for extending its mandate.

ROSEMARY DICARLO ( United States) stressed her country’s support for thetransition to Afghan ownership and leadership. The transfer of security responsibilitywas already beginning. In the coming days, she expected that the first areas to undergothe transition would be announced by President Hamid Karzai. There would also be acivilian component to the transition, particularly in mediation, human rights, coordinationof assistance and related areas. She welcomed recent political advances in Afghanistan,and she urged all institutions to act within their respective functions under Afghan law,

including the electoral reform process.

She looked forward to three surges, as outlined by her Government, in security,diplomacy and development. A responsible reconciliation process was an important partof that, under Afghan leadership. Insurgents who chose the path of peace would find awilling partner in the United States. She also noted Pakistan’s importance in ending theviolence in Afghanistan. In addition, the pro-Government forces had made great effortsto reduce civilian casualties and would continue to do so, in contrast to insurgents whotargeted civilians.

JOSÉ FILIPE MORAES CABRAL (Portugal) said that peace and security werethe Afghan Government’s overarching needs and should, therefore, be the key aims of the United Nations system working in that country. The Council and the wider international community must acknowledge that the progress thus far, whilecommendable, was also reversible. As such, all stakeholders must work harder to bolster 

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their efforts to ensure that relevant capacities were strengthened so that the progress wassustained. Afghanistan was in the process of transition — “a process in which we allhave a stake and in which we must all assume our responsibilities”. As that was the case,Afghanistan must be able to rely on its partners. He looked forward to the upcomingBonn conference to lay out plans to support the transition.

Meanwhile, he said, Afghanistan had a host of challenges that needed to beaddressed, including building public trust in Government institutions, supporting thebuilding of a professional and effective police force, and overcoming obstacles toelectoral reform. As for the Council, Portugal was pleased to be working within the 15-nation body on all efforts that would allow UNAMA to fulfil its mandate, includingsupporting the Afghan Government’s endeavours to launch the transition and to fightcorruption. Another fundamental challenge was ensuring coherence in the allocation of resources to bolster the Government’s battle against the narcotics trade and to hasten

reconstruction. The overriding security situation should not be a pretext to compromisereconciliation or to undermine the promotion and protection of human rights. “Afghanistan’s future should not be built over respect of human rights for all,” hereiterated, especially the rights of women and children, which were an integral part of peace and reconciliation.

MANJEEV SINGH PURI ( India) said the Kabul conference had marked thebeginning of a new phase in the partnership between the Afghan Government and theinternational community. The hallmark of the Kabul process was Afghan ownership and

leadership towards realization of the shared pursuit of sustained and tangibleimprovements in security, governance and development. The North Atlantic TreatyOrganization (NATO) summit, held in Lisbon in November 2010, had provided a roadmap for the transition to full Afghan responsibility for security and leadership by the endof 2014. India agreed that the transition process must be Afghan-owned and that theexercise must be planned and implemented in a systematic manner that ensured, amongother things, the protection and promotion of human rights. It must also be accompaniedby an inclusive political process and intra-Afghan dialogue.

He said the transition must be linked to on-the-ground realities rather than “rigidbenchmarks”. It must also be constantly assessed, he said, stressing that Afghanownership was critical, not only to meeting security priorities, but also to ensuring broadsocio-economic development and reconstruction. That implied greater coherence — andstreamlining — of international development initiatives to ensure better alignment withAfghan priorities and increasing management by Afghan institutions. India supported theAfghan Government’s efforts to reintegrate those individuals who renounced violence,did not have links to terrorist groups and were committed to democracy and human

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rights. At the same time, all stakeholders must guard against the impulse to consider such efforts a short-cut to facilitate reconciliation. Indeed, ignoring the concreteobjectives in that regard outlined in the Kabul process would risk Afghanistan once againbecoming a safe haven for terrorists and extremist groups.

KIO AMIEYEOFORI ( Nigeria) welcomed Afghan efforts to strengthendemocratic structures, as well as UNAMA support in those areas. An open, crediblepolitical process would yield many benefits, and political dialogue could also provebeneficial. He expressed concern over the upsurge of violence and civilian casualties inseveral provinces, even as transition was planned. He urged the Government, therefore,to fully commit itself to taking responsibility and building its capacities in security, goodgovernance, rule of law and development. To build capacity, funds should be channelledthrough Afghan institutions. He affirmed the importance of regional and internationalcooperation to consolidating peace. Reaffirming support to UNAMA, he favoured the

mandate extension.

PHILIP PARHAM ( United Kingdom) said that the international community mustsupport the Afghan Government’s reconciliation efforts at the same time that it wassupporting its transition to ownership of security and other sectors. He endorsed thattransition in line with the Kabul declaration, and said that, as part of it, 50 per cent of aidfunding should be channelled through Afghan institutions, with 80 per cent to Afghanpriorities. UNAMA had an important role working together with the AfghanGovernment. It must have the Government’s full support and must be able to operate in

any part of the country necessary.

He welcomed the consolidation of Parliament and said that was an opportune timeto press ahead with electoral reform, with UNAMA’s support. His country would work on the security transition with its ISAF partners, following good progress in buildingsecurity forces by the Afghans. If that progress was to be sustainable, it must besupported by gains across the rule of law sector. He condemned insurgent tactics tointimidate the civilian population and endorsed measures to further protect civilians. Atthe same time, he supported political initiatives to end the violence. He underlined his

country’s long-term commitment to Afghanistan and fully supported the renewal of UNAMA’s mandate.

MARTIN BRIENS ( France) said the Afghan Government and its partners hadlaid out the road map for the transition, and President Karzai would shortly announce theareas in which that process was set to begin. France supported the transition and wanted

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it to be “lasting and irreversible”. The exercise should also promote and sustain Afghanownership of all security, development and governance initiatives. Several key factorsunderpinned the transition’s success, including an all-out effort to end civilian deaths;more work to bolster the reconciliation process; and better coordination of civilassistance, based on Afghan budget priorities.

At the same time, he said the Government needed to provide assurances thatassistance funds would be earmarked for vital priorities, including reconstruction. As thetransition process got under way, UNAMA’s work would be more crucial than ever. Themandate approved by the Security Council last year should continue to guide the effortsof the Secretary-General’s Special Representative. Going forward, the SpecialRepresentative should be involved in the work of the Electoral Commission, especiallythe reform efforts, even as that exercise should be led by the Afghan Government.Further, UNAMA’s role should be tailored to the ongoing transition and be reconsidered

in the year ahead.

ALFRED MOUNGARA MOUSSOTSI ( Gabon) said the conclusion of an overalltransition must be the underlying concern of the Afghan Government and the overall aimof international support. Gabon regretted the fact that the political transition was weak,as evinced by controversy over representation in Parliament. Such disagreements couldslow the transition. Nevertheless, the recent seating of the Parliament was a credit to thedetermination of the Afghan people to ensure democracy. He was pleased with thenumber of women that had been elected to Parliament and stressed the need for the

Government to ensure inclusiveness and integration at all levels.

He said that the promotion and protection of human rights was another area inwhich the Government must redirect its efforts. The situation of women and children,especially the involvement of children in armed groups, was a source of serious concern.“The future of Afghanistan is taking place now,” he stressed, urging the internationalcommunity to redouble its efforts to back the ongoing political processes. A broad showof international support would raise the hopes of many young people and women in thecountry that had suffered for so long. Gabon supported the Government’s move to secure

sovereignty over all its activities.

ALEXANDER PANKIN ( Russian Federation) agreed in general with the reportand recommendations of the Secretary-General. He expressed deep concern over thecontinuing violence and the increase in civilian casualties, as well as negative trends thatraised concerns in the region over reconciliation efforts. Only those who renounced

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violence should be included in those efforts. Effective compliance with the “1267sanctions” should be pursued at the same time. He supported the transition of responsibilities to the Afghan Government, but capacities must be built for that purpose.

He proposed that regional organizations could be of assistance to theconsolidation of peace in Afghanistan, and drew attention to the need to physicallydestroy narcotics crops and prevent the flow of precursors. Active, counter-drug effortswere needed, and he welcomed proposals of the collective security organization to assistin that regard. It was only through cooperative engagement that a stable Afghanistan freefrom the drug trade would be achieved. He pledged his country’s continued assistancefor that purpose.

NÉSTOR OSORIO ( Colombia) said it was appropriate that UNAMA’s mandatefocus on supporting the Afghan Government in critical areas. He supported the transitionto Afghan leadership in key areas, accompanied by political and dialogue processes. Hethus welcomed steps taken to commence dialogue. Likewise, international organizationsshould continue to support the Afghan Government in line with the Kabul declaration.The fight against corruption and organized crime must also continue. He urged all partiesto the conflict to fulfil their obligations to ensure the safety of civilians.

He reaffirmed Colombia’s willingness to strengthen bilateral cooperation in

combating the illicit drug trade and other organized crime, asserting that alternativeeconomic opportunity was an important part of that effort. Common strategies in theregion and beyond must be adopted. He endorsed the principles of the Secretary-Generalthat must be followed during the transition to Afghan responsibility.

REGINA MARIA CORDEIRO DUNLOP (Brazil) said the there had beenconsiderable progress in Afghanistan over the past year, and she congratulated theAfghan people, who, despite facing serious threats, went to the polls to vote in the WolesiJirga elections on 18 September 2010. She also acknowledged the importance of the

work of the Independent Election Commission and Electoral Complaints Commission,which had been commendable throughout the polling. At the same time, it wasregrettable that insecurity during the elections had led to the closing of some pollingstations, leading some groups to claim they had been underrepresented. In any case, thetensions over the status of Parliament must be solved “in a mature and institutional way”.Efforts to lay the foundations for a sustainable peace through political dialogue mustcontinue, as only the involvement of all stakeholders would overcome the remainingchallenges.

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She welcomed the Afghan Government’s latest peace and reconciliation efforts,including the launch of the High Peace Council and the Peace and ReintegrationProgramme. The fact that armed groups were increasingly joining the reintegration

process was another positive trend, which the international community should support.Nevertheless, the security situation was still alarming and the human cost of the conflicthad risen in 2010. Although the majority of civilian casualties were caused by anti-Government forces, it was important that ISAF and other international forces reviewedtheir tactics in order to further reduce those figures. She expressed particular concern atthe recent increase in the number of deaths among women and children. There was nomilitary solution to the conflict; the Kabul process must be closely followed until thetransition to full Afghan leadership was attained. The next few years would be a criticalopportunity for donors to support Afghan priorities and to commit to the principles of aideffectiveness.

MIRSADA ČOLAKOVIĆ ( Bosnia and Herzegovina) said she remainedconcerned by the deterioration of the security situation, owing to the increase in militaryoperations, use of improvised explosive devices, and suicide attacks. Regrettably, some7,120 civilians had lost their lives last year — a 19 per cent increase over 2009. She wasespecially concerned about the rise in the number of deaths of children and said that the“vast human losses” indicated that the solution to the conflict could not be military.Indeed, to prevent further human suffering, a political solution must be found, and allparties must strengthen their efforts to protect civilians and ensure that their actions werein line with international legal norms.

She welcomed the recent positive political developments, which were animportant signal that the country was taking the first necessary steps on the path towardsnational unity and strengthening the capability of its institutions to meet the needs of thepeople. She was also pleased that the reconciliation process had continued to gainmomentum and, in that regard, encouraged UNAMA to support the work of the HighPeace Council and to provide broader backing to the intra-Afghan reconciliation process.She also hailed recent regional cooperation between Afghanistan and Pakistan, Iran andIndia, among other partners, to promote stability and sustained economic growth anddevelopment. Sustainable security must go hand-in-hand with economic and socialdevelopment.

Turning to obstacles, she hoped the problems that arose during the electionprocess would be solved in an open and transparent manner. As for the impasse over theKabul Bank, linked to the finalization of the agreement on a new International Monetary

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Fund (IMF), Bosnia and Herzegovina supported a solution that would best reflect theinterests of the Afghan people and the country’s economic development. Shecommended the United Nations assistance to refugee returns, and called on allstakeholders to extend all support to ensure that they returned home in safety andsecurity. Her country supported the one-year extension of UNAMA’s mandate.

WANG MIN (China), speaking in his national capacity, said that support toAfghan political progress, rule of law, governance and security capacity must go hand inhand with the transfer of responsibility to Afghan authorities. He supported UNAMA inits central role in coordinating assistance to the country, and endorsed extending itsmandate. The Council should heed the request of the Government to review and amendUNAMA’s mandate in the context of the needs of the transition period, he said.

CESARE MARIA RAGAGLINI ( Italy) said that his delegation supported theupcoming Afghan Transition process, which it saw, not as an exit strategy, but as acondition-based joint process aimed at achieving Afghan ownership in security,governance and development. Italy was doing its utmost to ensure that the transition wasirreversible, including increasing security trainers in the amount of up to 700 units out of 2,400 on the ground; establishing a “civilian-oriented” presence in Herat; forging newinitiatives to support governance at the local and central levels; and supporting thedevelopment of the private sector, among other actions. The Kabul process — wherebythe Government of Afghanistan, assisted by the international community, committed toundertake reforms, improve governance and rule of law, promote social and economic

development and improve security — remained pivotal. Roughly 70 per cent of Italy’said to the country was already aligned with the priorities indicated by the AfghanGovernment, but obstacles impeding the channelling of additional resources through theAfghan budget needed to be removed and the management of public funds improved.

He said his country also supported the inter-Afghan political process, whichconsisted of the “intertwined” processes of reintegration and reconciliation. In thatrespect, the “red lines” agreed at the Kabul conference must be respected, givingconsideration to local traditions and sensibilities and promoting fundamental human

rights. The delegation encouraged the installation of the local bodies needed for bothreconciliation and reintegration, which would require the support of Afghanistan’sregional partners. Finally, more joint action was needed on issues including trade, water,energy, agriculture and education.

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TSUNEO NISHIDA (Japan), who prefaced his statement with an expression of deep appreciation for the sentiments of condolences extended to his country by membersof the Council over the devastating earthquake and tsunami, said that, while respectingAfghan ownership, the international community, in full cooperation with UNAMA,should continue its support for Afghanistan because that country’s reconstruction and

development were among the international community’s most important concerns. Assuch, it was an important step for the Afghan Government that NATO allies and partnershad confirmed at their meeting in Lisbon in November 2010 their commitment to createconditions to enable Afghan forces to take the lead for security in all the country’sprovinces by the end of 2014.

He said that, in order to ensure the country’s sustainable development, it was alsonecessary to establish a system that enabled it to express its own will, based ondemocratic processes. The Afghan-led political process of reconciliation and

reintegration would be especially crucial in stabilizing Afghanistan this year. Thus, inorder to consolidate the gains made so far and to improve the well-being of the Afghanpeople, the international community should respond to the nation’s development needsand promote the stabilization of livelihoods and construction of basic economicinfrastructure. In that, both the Afghan Government and the international communitymust make unrelenting efforts. Japan continued to provide assistance in human resourcedevelopment, infrastructure and for the development and rebuilding of the agriculturalsectors and rural communities. He also reaffirmed Japan’s continued support toUNAMA’s efforts.

JIM MCLAY (New Zealand), citing his Government’s strong support for thetransition process, welcomed the Afghan Government’s commitment to assuming leadresponsibility for security throughout the country. Although Bamyan Province itself,where New Zealand led the Provincial reconstruction Team, was relatively secure,Afghanistan’s overall security situation remained worrying. That fragile situationreinforced the need for the Afghan National Security Forces, in partnership with ISAF, toquash insurgent activity and consolidate security gains. Combined with a push toincrease civilian capacity, security gains would provide space for a political solution — an essential element to ensuring a secure and prosperous Afghanistan.

He said that that political solution required isolating hardcore insurgency leadersand integrating into mainstream society those who renounced violence, abandonedalliances with Al-Qaida and embraced the Afghan Constitution. Increased pressure onthose that disrupted the peace must be coupled with opportunity for those insurgents thatlaid down their arms and helped make that peace durable. Along with Afghanistan, itsneighbours, and the international community, through UNAMA, played an important role

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in supporting a political solution. For that reason, New Zealand welcomed the Council’sintention to review the Mission’s mandate, and he urged the Council to give the mandatewhat it needed to support the Afghan Government effectively during the critical period of transition between now and the end of 2014.

TINE MORCH SMITH ( Norway) affirmed support for UNAMA during thetransition in Afghanistan, noting her country’s great stake in the future of that country,given its significant contributions of both troops and development aid. She stressed thatNorway’s engagement was based on the principles of Afghan ownership andresponsibility as expressed in the Kabul declaration. In that respect, she supportedtransition of security responsibilities to Afghan leadership in the coming months,provided that certain fundamental conditions were met. At the same time, she stressedthe importance of a viable reform agenda, an end to corruption and the Government’sfulfilment of its obligations in many areas.

She said that future success was to a large extent dependent on developments atthe provincial and district level, pending the implementation of the Afghan SubnationalGovernance Policy. The continued presence of UNAMA offices was a precondition for asuccessful and gradual political transition, along with closer cooperation and dialoguebetween UNAMA and the Afghan authorities. She strongly supported the call for strengthened protection of civilians. She also endorsed Afghan-led electoral reform andan Afghan-led peace process through structured political dialogue. Noting with concernthe continued assaults on freedom of speech, she commended the establishment of human

rights machinery in Afghanistan and urged greater efforts to stop violence againstwomen.

ERTUĞRUL APAKAN ( Turkey) said that 2011 would be a crucial year for Afghanistan, as that country’s Government and its international partners moved steadilytowards transition to full Afghan ownership and responsibility. Turkey was encouragedby the steps taken so far and looked forward to President Karzai’s official announcementnext week of the first tranche of the process, which was set to conclude in 2014. Whilehe was optimistic about the results, he was also realistic that, given the challenges, the

transition was not going to be easy.

“We will all make sure this gradual, conditions-based process is irreversible byexerting concerted and sustained efforts in conformity with the priorities andrequirements of the Afghan Government,” he said, echoing the sentiments of other speakers that the transition would not mean the end of the international community’s

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engagement in Afghanistan. Turkey was confident that the United Nations and itsMission in Afghanistan were capable of playing a critical role through 2014, if providedwith the necessary tools. Therefore, UNAMA’s mandate must be strengthened in linewith the principles of Afghan leadership and ownership. While the internationalcommunity was working with the Government to ensure a sustainable transition, it must

also help usher in the requisite political changes. To that end, it must help the AfghanGovernment press ahead with national reconciliation and support interactions withregional partners and neighbouring countries.

JOHN MCNEE ( Canada) welcomed a review of the Mission in 2011. Efforts for the coming years should focus on the process towards greater Afghan leadership, whichmust be undertaken in close collaboration with the Government of Afghanistan. Canadaremained committed to working with its international partners and the Government of Afghanistan in supporting the Kabul process and realizing the objectives of that process,

including the development of the education and health sectors and the advancement of human rights. Regarding the goal of transitioning security responsibilities to Afghanauthorities by 2014, the international community should bear in mind the need to bolster civilian governance institutions that would oversee the Afghan National Security Forces.

He said the security situation remained a serious concern, pointing to a recentUNAMA report, conducted jointly with the Afghan Independent Human RightsCommission, which found that over three quarters of all civilian casualties in 2010 hadbeen caused by insurgents. Canada also strongly condemned ongoing attacks against

humanitarian personnel. Reconciliation between the Government and the Taliban wasessential to bring the conflict in Afghanistan to a conclusion. That process should beAfghan-led, but the international community must support a process that respected redlines requiring the insurgents to renounce violence, recognize and respect the AfghanConstitution and sever ties with Al-Qaida and other terrorist organizations. Canadacalled on all actors to implement Security Council resolutions on women, peace andsecurity — an area in which some progress had been made. However, continued effortsto prevent “backsliding” were needed. Central also to Afghanistan’s development was itsrelationship with its neighbours. The 2010 parliamentary elections — marred by “seriousirregularities” — provided lessons learned to strengthen electoral institutions in thefuture.

ABDULLAH HUSSAIN HAROON ( Pakistan) said that complete Afghanownership in security, governance and development, including the disbursal of international aid within Afghan priorities and frameworks would facilitate long-termpeace, stability and development. His country advocated a comprehensive vision for meeting the challenges in Afghanistan, with security being only one facet of a myriad of 

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challenges. For its part, Pakistan was extending the fullest security and intelligencecooperation to Afghanistan, with the number of its military and paramilitary personneldeployed along the border greater than all international troops in the country. “We do notwant Afghanistan to become a theatre of proxy wars or descend into chaos andinstability,” he stressed.

He supported an Afghan-led and inclusive reconciliation process, with a view tobringing the opposition groups into the political mainstream. Ending the violencerequired an attempt to understand all the parties. In that context, he supported the visit of the Chairman of the High Peace Council to Pakistan and the recent meeting of theInternational Contact Group in Jeddah, as well as the High Peace Council’s interactionwith the United Nations and the Organization of the Islamic Conference. The SecurityCouncil, he emphasized, should be a willing partner of the Afghan people in theimportant and delicate reconciliation process. He added that the quest for peace and

stability in Afghanistan was dovetailing into a long-term cooperative partnership. Hereiterated support for the objectives and efforts of UNAMA, as well as for its mandateextension.

MOHAMMAD KHAZAEE ( Iran) said he attached great importance to the roleof the United Nations in coordinating international efforts in Afghanistan. Theannouncement of the drawdown of United States forces as of July of this year had beenwelcome, but it should not lead to the setting up of permanent bases in Afghanistan.Obviously, the presence of foreign military forces, in whatever form and for whatever 

justification, would not help secure peace and stability in Afghanistan; rather, it wouldprovide a concrete excuse for extremist groups to prolong the war. Iran was alsoconcerned about the increase in the deaths and displacement of civilians. “Putting thelives of innocent people at the mercy of drone attacks must be halted,” he said, addingthat there was no justification for sacrificing the lives of civilians in the name of countering terrorism.

He welcomed the setting up of the High Peace Council, and noted that the head of that body had recently visited Iran. The Iranian Government had expressed its readiness

to host one of the Council’s meetings with Afghan political groups and factions in Iran.He hoped the High Peace Council would expand its discussions on reconciliation andreintegration within Afghanistan and the countries in the wider region. As for other regional cooperation, a flourishing Afghanistan would be ideal for that country’sneighbours, and ongoing cooperation in areas such as trade, economic development andinfrastructure rehabilitation must be supported. Iran was ready to host meetings withAfghanistan and other neighbours to identify more concrete measure that might be

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necessary for strengthening a regional framework for development projects and securityinitiatives.

Finally, he cited the narcotics trade as one of the region’s most serious challenges,and urged everyone to take very seriously the warning by the United Nations Office onDrugs and Crime (UNODC) that the recent uptick in opium prices might encouragefarmers to plant more opium poppies. Those drugs also served as a breeding ground for terrorists and illegal groups bent on destabilizing the Afghan Government. Iran calledagain on all those who carried a responsibility for combating narcotic drugs to take moreconcrete steps to curb that threat as soon as possible.

ANDREW GOLEDZINOWSKI ( Australia) reaffirmed his Government’s support

for all international efforts in Afghanistan. Next week, President Karzai planned toannounce the first provinces that would begin carrying out the aims of the transitionprocess. The international community supported that process, which also marked thebeginning of implementing the President’s goal for Afghan National Security Forces totake the lead in conducting security operations by the end of 2014. Since the Council’slast meeting on Afghanistan, a Speaker had been elected to the Wolesi Jirga. Further investigations into the September parliamentary elections had been referred to a specialtribunal, and it was vital for that and further probes to be conducted in line with theConstitution and other relevant Afghan laws.

He encouraged President Karzai and all those in the Afghan Government workingto rebuild their country to continue strengthening the foundations of sustainable peaceand constitutional democracy. “Strengthening Afghan governance and development willbe critical to a sustainable, irreversible transition,” he said, adding that the United Nationsplayed a vital role in the international civilian efforts under way to build Afghan capacityand leadership to support the transition process. In all that, he stressed that, while theinternational community and Afghanistan had come a long way, there was still somedistance to travel. An Afghan-driven reconciliation and reintegration were the keys to thecountry’s future. While UNAMA was supporting the Government’s efforts to that end,Afghanistan’s neighbours also played an important role. Turning to Australia’s

engagement in Afghanistan, he noted, among other things, that his Government was thetenth largest ISAF contributor and largest overall non-NATO contributor. Australia alsoplanned to provide some $123 million in development assistance in the 2010-2011period.

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PEDRO SERRANO, Acting Head of the Delegation of the European Union to theUnited Nations, welcomed the wish of the Afghan Government to take the lead in thetransition process and the overall development of the country. At the same time, heaffirmed that sovereignty also implied responsibility, foremost towards the Afghanpeople. In that context, he welcomed the build-up of Afghan security institutions but

recognized that they still needed to become stronger. The Union, therefore, supportedtraining efforts. A comprehensive vision of security encompassed good governance,human rights, development and an inclusive political process. It was time, in thatcontext, to resolve current disagreements over the composition of the Parliament, whilerespecting the mandate of the electoral institutions and the separation of powers.

He said that continuing to build strong and credible institutions, able to deliver justice and other services to the people were key priorities. Along with human rightsimprovements, greater involvement of women as actors in post-conflict development was

needed. The European Union’s assistance to Afghanistan had been increased to some€200 million per year and it was also on track regarding the alignment of its programmeswith Government priorities and the channelling of assistance through AfghanGovernment structures and multi-donor trust funds. It focused on capacity-building in allfields. UNAMA continued to play a critical role in the coordination and management of international assistance, as well as in support of the Afghan-led peace and reconciliationprocess, which must respect human rights and transitional justice. He endorsed acontinued United Nations role in electoral reform, as well as the extension of a strongUNAMA mandate.

Which Factors Effect Economic Development?

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Basic factors: Raw materials, labour force, inovation and enterprise,

power supply, communication and transportation links. These factors are the basis uponwhich countries can further economic development.

Internal factors: Government policies (they must favour business e.g. Taxation,regulation, tariffs, taxes/ duty, incentives to help develop business and industry), businessculture (for example Japan has a very developed business culture regarding thepopulations attitude to new ideas and processes and the rate at which new ideas areformed).

External factors: Geopolitcs, economic globalisation (foreign investment, foreign labour,trade links, sharing of knowledge, financial flow between countries), TNC's and

corporations (investment from Transnational Corporations such as macdonalds increaseswages of populations by creating jobs.

Outcomes: Economic devleopment has a range of both positive and negativeconsequences, namely; Bad... Change in the environment (industrialisation means that thebeauty of an area can be compromised) change in culture and morals (traditional cultureand morals can be lost due to the impacts of TNC's and inflow of different people into thearea e.g. Tourism) There is often a greater inequality gap as a small number become veryrich and the poor only gain a small profit (this can cuase resentment within a country asthe distribution of wealth is unbalanced. An unbalanced economy can also cause a greatboom in industry which if often very unstable causing a slump or depression in an

economy Good.... Improvement of quality of life (indicators of which are, generalhappiness, health, friends and family, education, income and affluence, job security,clean area to live in, eectricity running water ect.) improvement in standars of living andincome. It can often lead to more democracy within a country.

Economic development is the increase in the standard of living in a nation's populationwith sustained growth from a simple, low-income economy to a modern, high-income

economy.[1][2]

 Also, if the local quality of life could be improved, economic developmentwould be enhanced.[3] Its scope includes the process and policies by which a nationimproves the economic, political, and social well-being of its people. [4]

Gonçalo L Fonsesca at the New School for Social Research defines economicdevelopment as "the analysis of the economic development of nations."[5]

The University of Iowa's Center for International Finance and Development states that:

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"'Economic development' is a term that economists, politicians, and others haveused frequently in the 20th century. The concept, however, has been in existencein the West for centuries. Modernization, Westernization, and especiallyIndustrialization are other terms people have used when discussing economicdevelopment. Although no one is sure when the concept originated, most people

agree that development is closely bound up with the evolution of capitalism andthe demise of feudalism."[6]

The study of economic development by social scientists encompasses theories of thecauses of industrial-economic modernization, the phases or waves of economicdevelopment historically used by economic developers, plus organizational and relatedaspects of enterprise development in modern societies. It embraces sociological researchon business organization and enterprise development from a historical and comparativeperspective; specific processes of the evolution (growth, modernization) of markets andmanagement-employee relations; and culturally related cross-national similarities anddifferences in patterns of industrial organization in contemporary Western societies. On

the subject of the nature and causes of the considerable variations that exist in levels of industrial-economic growth and performance internationally, it seeks answers to suchquestions as: "Why are levels of direct foreign investment and labour productivitysignificantly higher in some countries than in others?"[7]

Mansell and Wehn state that development has been understood since the second WorldWar to involve economic growth, increases in per capita income, and attainment of astandard of living equivalent to that of industrialized countries.[8][9]

Economy Development can also be considered as a static theory that documents the stateof economy at a certain time. According to Schumpeter (2003)[10] the changes in this

equilibrium state to document in economic theory can only be caused by interveningfactors coming from the outside.

Economic development typically involves improvements in a variety of indicators suchas literacy rates, life expectancy, and poverty rates. GDP does not take into account other aspects such as leisure time, environmental quality, freedom, or social justice; alternativemeasures of economic wellbeing have been proposed (more).

A country's economic development is related to its human development, which

encompasses, among other things, health and education. These factors are, however,closely related to economic growth so that development and growth often go together .[11]

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Contents

[hide]

• 1 Intensive versus extensive growth • 2 Does growth create development? • 3 Models of economic development 

o 3.1 Harrod–Domar model o 3.2 Exogenous growth model o 3.3 Endogenous growth model o 3.4 Information-led development 

• 4 Measuring economic development • 5 Regional policy 

o 5.1 Economic developers • 6 See also • 7 References 

• 8 External links 

Intensive versus extensive growth

A closely related idea is the difference between extensive and intensive economicgrowth. Extensive growth refers to the increase of overall wealth, while intensive growthrefers to the increase of per capita wealth. Unlike extensive growth, intensive growth ismainly driven by productivity growth and technological progress. While economies in thepre-industrialization period grew extensively, intensive growth is a relatively recentphenomenon that came with modern economic growth.

Does growth create development?

Dependency theorists argue that poor countries have sometimes experienced economicgrowth with little or no economic development; for instance, in cases where they havefunctioned mainly as resource-providers to wealthy industrialised countries. There is anopposing argument, however, that growth causes development because some of theincrease in income gets spent on human development such as education and health.

According to Ranis et al. (2000)[12], we view economic growth to human development asa two-way relationship. Moreover, Ranis suggested that the first chain consist of 

economic growth benefiting human development with GNP. Namely, GNP increaseshuman development by expenditure from families, government and organizations such asNGOs. With the increase in economic growth, families and individuals will likelyincrease expenditures with the increased in incomes, which leads to increase in humandevelopment. Further, with the increased in expenditures, health, education tend toincreases in the country and later will contribute to economic growth.

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In addition to increasing private incomes, economic growth also generate additionalresources that can be used to improve social services (such as healthcare, safe drinkingwater etc...). By generating additional resources for social services, unequal incomedistribution will be limited as such social services are distributed equally across eachcommunity; benefiting each individual. Thus, increasing living standards for the public.[13]

To summarize, as noted in Anand’s article (1993) [14], we can view the relationshipbetween human development and economic development in three different explanations.First, increase in average income leading to improvement in health and nutrition (knownas Capability Expansion through Economic Growth). Second, it is believed that socialoutcomes can only be improved by reducing income poverty (known as CapabilityExpansion through Poverty Reduction). Thirdly, (known as Capability Expansionthrough Social Services), defines the improvement of social outcomes with essentialservices such as education, health care, and clean drinking water.

Models of economic development 

The 3 building blocks of most growth models are:

1. the production function,2. the saving function3. the labor supply function (related to population growth).

Together with a saving function, growth rate equals s/β (s is the saving rate, and β is thecapital-output ratio). Assuming that the capital-output ratio is fixed by technology anddoes not change in the short run, growth rate is solely determined by the saving rate on

the basis of whatever is saved will be invested.

Harrod–Domar model

The Harrod–Domar model delineates a functional economic relationship in which thegrowth rate of gross domestic product (g ) depends positively on the national saving ratio(s) and inversely on the national capital/output ratio (k) so that it is written as g = s / k .The equation takes its name from a synthesis of analysis of growth by

Exogenous growth model

The exogenous growth model (or neoclassical growth model) of Robert Solow and othersplaces emphasis on the role of technological change. Unlike the Harrod-Domar model,the saving rate will only determine the level of income but not the rate of growth. Thesources-of-growth measurement obtained from this model highlights the relativeimportance of capital accumulation (as in the Harrod–Domar model) and technologicalchange (as in the Neoclassical model) in economic growth. The original Solow (1957)study showed that technological change accounted for almost 90 percent of U.S.economic growth in the late 19th and early 20th centuries. Empirical studies on

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developing countries have shown different results (see Chen, E.K.Y.1979 Hyper-growthin Asian Economies).

Also see, Krugman (1994), who maintained that economic growth in East Asia was basedon perspiration (use of more inputs) and not on inspiration (innovations) (Krugman, P.,

1994 The Myth of Asia’s Miracle, Foreign Affairs, 73).Even so, in our postindustrial economy, economic development, including in emergingcountries is now more and more based on innovation and knowledge. Creating businessclusters is one of the strategies used. One well known example is Bangalore in India,where the software industry has been encouraged by government support includingSoftware Technology Parks.

However, when looking at the growth rate put forward from the neoclassical growthmodel, it seems to suggest that countries with same characteristics and technology willeventually converge to the same rate of growth. However, one should know that the

knowledge presented in countries that promotes technological advancement is notstationary. Meaning that knowledge are linked to individual and not to the country.

According to Lucas Jr (1988)[15] to compensate the movement of knowledge, we shouldimplement factors such as labour factor to predict immigration flow. With labour movement coming into factor, we can then predict the flow of knowledge which can thensuccessfully lead to increase in technology

Endogenous growth model

A complete explanation of economic development requires a self-starting and self-

sustaining model of economic growth that is not provided by neoclassical and Keynesiangrowth models. The dynamic-strategy model, which is based on an endogenous demand-side theory, provides these characteristics. This model was developed by G.D. Snooks inLongrun Dynamics (1998) and Global Transition (1999).

Information-led development

Information-led development (ILD) most commonly refers to a development strategywhereby a developing country makes as a primary economic policy focus the creationand development of a national information technology (IT) sector with the express aim of relying on this sector as an engine of growth. Notable examples of such countries are

India and the Philippines.

More recently, a new formulation of ILD has emerged. With origins in communityeconomic development in the United States, the new ILD model describes the use of datato generate actionable information or information solutions to development challenges.Examples of this include the inclusion of non-financial payment obligations in consumer credit files, also known as alternative data, and the use of this information inunderwriting, as a means to reduce financial exclusion in the United States, where an

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estimated 54 million Americans are shut out of mainstream credit access as there isinsufficient information about them in their credit files to be scored by a credit scoringmodel. This variant of ILD was pioneered by PERC, a non-profit policy researchorganization and development intermediary headquartered in Chapel Hill, NorthCarolina[16] . Other US-based organizations, including Social Compact  [17]  and the Local

Initiatives Support Corporation [18]

  , employ variants of ILD, but none has applied thisinternationally except for PERC.

This development model is gaining traction in emerging markets such as Colombia andSouth Africa, where the data is being used to reduce financial exclusion and facilitatecredit access as a means to build wealth and form assets. It is also attracting increasingattention from development agencies, including USAID, the International FinanceCorporation, the World Bank Group, and the Consultative Group to Assist the Poor .

Measuring economic development 

Main article: List of countries by GDP (real) growth rate

World map showing GDP real growth rates for 2008.

North America, even though one of the slowest growing continents, has stable growth.Most of the faster growing economies are in the Caribbean.

South America has a Boom and Bust growth with high followed by recession growth,most notable in Brazil, however growth has been stabilizing and the whole continent isgrowing.

Africa has seen the fastest growing but also the slowest growing/declining. From the oilfields which made Angola the 3rd fastest growing country in the world, to Zimbabwe theslowest growing and declining country in the world. Oil in Africa has created 'wealthspots' were a few countries have exceeded their neighbors in wealth. Out of the 10 fastestgrowing countries in the world, 3 were African. Some countries have in the past been thefastest growing in the world. Equatorial Guinea reached 75% growth in 2004 because of oil reserves.

Europe has one of the most stable growth rates. After the fall of the Soviet Union, therewas a period of economic decline in Eastern Europe over the 1990s, followed byrecovery in the 2000s. The region is now experiencing growth, particularly in thosecountries that have recently joined the European Union. If the Caucasus were included,

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Europe would be one of the fastest growing continents in the world. Most countries aregrowing at a medium speed; however, many smaller countries exceed 7% and growexceptionally faster than their neighbors. Out of the 10 fastest growing countries in theworld, only 1 is in Europe.

Overall in the 20th century Asia was seen as the area with most growth; however, in the21st century, most of this has been dominated by China. Some spots of growth arestarting to appear in East and even South Asia. Most nations with high populations haveseen high growth especially. Out of the 10 fastest growing countries 3 were directly inAsia, and 3 indirectly or partially.

Meanwhile Oceania has seen moderate growth. The only exceptional growth in Oceaniahas been on Vanuatu.

Some countries have negative growth, most often due to ongoing wars or hyperinflation. These countries include Palestinean territories, Zimbabwe, Fiji and Chad.

Other sources of information can also be used to demonstrate economic development.These include GVA, Unemployment and Business Data.

Regional policy 

In its broadest sense, policies of economic development encompass three major areas:

• Governments undertaking to meet broad economic objectives such as pricestability, high employment, and sustainable growth. Such efforts includemonetary and fiscal policies, regulation of financial institutions, trade, and tax

policies.• Programs that provide infrastructure and services such as highways, parks,

affordable housing, crime prevention, and K–12 education.• Job creation and retention through specific efforts in business finance, marketing,

neighborhood development, workforce development, small business development,business retention and expansion, technology transfer, and real estatedevelopment. This third category is a primary focus of economic developmentprofessionals.

Economic developers

Economic development, which is thus essentially economics on a social level, hasevolved into a professional industry of highly specialized practitioners. The practitionershave two key roles: one is to provide leadership in policy-making, and the other is toadminister policy, programs, and projects. Economic development practitioners generallywork in public offices on the state, regional, or municipal level, or in public-privatepartnerships organizations that may be partially funded by local, regional, state, or federaltax money. These economic development organizations (EDO's) function as individual

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entities and in some cases as departments of local governments. Their role is to seek outnew economic opportunities and retain their existing business wealth.

There are numerous other organizations whose primary function is not economicdevelopment work in partnership with economic developers. They include the news

media, foundations, utilities, schools, health care providers, faith-based organizations,and colleges, universities, and other education or research institutions.

With more than 20,000 professional economic developers employed world wide in thishighly specialized industry, the International Economic Development Council [IEDC] [3] headquartered in Washington, D.C. is a non-profit organization dedicated to helpingeconomic developers do their job more effectively and raising the profile of theprofession. With over 4,500 members across the US and internationally, servingexclusively the economic development community, IEDC membership represents theentire range of the profession ranging from regional, state, local, rural, urban, andinternational economic development organizations, as well as chambers of commerce,

technology development agencies, utility companies, educational institutions, consultantsand redevelopment authorities. Many individual states also have associations comprisingeconomic development professionals, who work closely with IEDC.

There are issues with economic development professionals' attitudes towards boththemselves and their careers. Many believe that progress made in economic developmentis caused by chance and that they had little to do with it. This is widespread across theU.S.[19]

There is intense competition between communities, states, and nations for new economicdevelopment projects in today's globalized world, and the struggle to attract and retain

business is further intensified by the use of many variations of economic incentives to thepotential business such as; tax incentives, help with investment capital, donated land andmany others. IEDC places significant attention on the various activities undertaken byeconomic development organizations to help them compete and sustain vibrantcommunities.

Additionally, the use of community profiling tools and database templates to measurecommunity assets versus other communities is also an important aspect of economicdevelopment. Job creation, economic output, and increase in taxable basis are the mostcommon measurement tools. When considering measurement, too much emphasis hasbeen placed on economic developers for "not creating jobs." However, the reality is thateconomic developers do not typically create jobs, but facilitate the process for existingbusinesses and start-ups to do so. Therefore, the economic developer must make sure thatthere are sufficient economic development programs in place to assist the businessesachieve their goals. Those types of programs are usually policy-created and can be local,regional, statewide and national in nature.

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Cultural and social factors that

affect development

Posted on July 1, 2007 by Jeremy 

14 

1diggdigg This is part 4 of an exploration into why some countries are poorer than others.

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Discrimination

Sometimes there are social or cultural factors that hold back poor countries.Discrimination is one of these. If there are certain people groups that are discriminatedagainst, the country’s overall productivity can suffer. This may be a tribe, a caste, a racialcategory or minority language group. I have already mentioned Cameroon, which has

both French speaking and English speaking regions. All the infrastructure happens in theFrench speaking part. French speakers in Canada complain of the opposite. Welshspeakers in Britain, or Catalans in Spain, have historically faced similar problems. Racialdiscrimination may be an issue, excluding certain groups from economic activity, either deliberately or not. Racial minorities regularly have poorer exam results and economicprospects than the majority. More serious forms of exclusion would be apartheid SouthAfrica, or the Asian communities driven out of Uganda under Idi Amin, which wasdisastrous for Uganda’s economy.

Another division may be the role of women. Jeffrey Sachs talks about this in The End of Poverty: ‘Cultural or religious norms may block the role of women… leaving half the

population without economic or political rights and without education, therebyundermining half of the population in its contribution to overall development.’ If youdon’t believe that women should work, you have effectively halved the earning potentialof your country.

Population

Closely linked to this is the population issue. If women see staying at home and bringingup children as their chief role, they will have more children than those who work. Thereis nothing wrong with having lots of children, as long as you can provide for them.Jeffrey Sachs again: ‘With fewer children, a poor household can invest more in the healthand education of each child, thereby equipping the next generation with the health,

nutrition, and education that can lift living standards in future years.’

As Paul has talked about here before,world population has exploded. What isinteresting is that the countries wherethis has happened are often those wherewomen do not play a role in business or society. When women are educated andgiven a choice, some will stay at homeand look after children, and others willpursue careers or start small businesses.

This is an important factor, as some countries have seen their population double or triplewithout their economies keeping pace. That leaves more mouths to feed, and just notenough to go around.

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Culture

I’ve already mentioned the role of women, but culture can have hidden effects inbusiness, trade and development. China may be a major power now, but it was theworld’s most developed country in the middle ages, and stagnated, or even wentbackwards, for centuries. Part of this was cultural, a pride and sense of self-sufficiency

that led to a closing of China’s borders. ‘China seems to have long been stationary’,Adam Smith wrote in 1776, in his Wealth of Nations. ‘A country which neglects or despises foreign commerce… cannot transact the same quantity of business which itmight do with different laws and institutions.’ That’s changed, but nationalism, suspicion,or radical philosophy still has some countries closed down to outside involvement – communism in North Korea, or extremist Islam in Taliban Afghanistan, locking countriesout of development.

This the far end of the spectrum, but culture works in subtler ways too. Some culturesbelieve in a greater good, in unity, in the rule of law. They are optimistic, hopeful,ambitious and ready to pull together. Others can be paranoid, fragmented, uncertain of 

their place in the modern world, angry, resistant to change. Rich countries can beoverconfident and brash. Poor countries can see themselves as victims and becomedespondent. In his The Wealth and Poverty of Nations, economic historian David Landessays ‘If we learn anything from the history of economic development it is that culturemakes all the difference.’

The limits of cultural interpretations

At the same time, cultural influences on development are notoriously hard to call fromthe outside. Hinduism was often cited as one of the reasons why India would never develop. Because everyone accepts their place in the world, it was assumed that Hinduswould lack the ambition required to innovate and do business on an international stage.

The recent growth in India’s economy proves that wrong quite spectacularly. Koreaneconomist Ja-Hoon Chang quotes a 1911 travel book that describes Koreans as “sullen,lazy and religionless savages”, something that hardly holds true today. So did Koreanculture change, or was the writer simply being superior?

We understand each other better than ever in our globalized world, but our language andtraditions are still full of little prejudices that imply we are better than others, and that our neighbours are lazy and dirty and uncouth. I love the fact that not turning up for work iscalled ‘taking French leave’ in England, and ‘filez a l’Anglaise’ (or ‘doing an English’)in France. A Malagasy friend once joked that in Madagascar, every tribe believes thatevery other tribe eats cats. In short, culture no doubt plays a role in development, but wehave to watch our own biases as we seek to understand why some countries succeed andothers fail.

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Factors affecting economic and social development 

Factors affecting economic and social development 

This section considers the economic and social development of the non-industrial world

from two perspectives.

First, we review what is known about development, both social and economic. Theperspective that we take upon this is closely similar to the view that we advanceelsewhere about the fundamentals behind economic growth anywhere: that this is amanifestation of the working of a complex series of interlocking systems, of which theeconomic component is an essential part. There is, however, a long way to go in thedevelopment of these systems. In purely economic terms, the poorest 80% of the world'spopulations created around 2.6% of the tradable wealth in 1960. By 1980, this had fallento 1.1%, and appears to be around 0.9% of all value added at the turn of the century.Today, around 1.2 billion people inhabit the wealthy nations, but around the same

number live on less than US$1 per day. About the same number lack access to safe water and twice as many live without adequate sanitation. Achieving anything resemblingcatch-up is, evidently, some way off. Success stories such as Singapore and Hong Kongstem from a rich history of complex institutions, human resource and the pursuit of thebest. However, the key limits to creating a more complex framework within which togenerate wealth seems limited more by internal institutional issues than by factors such ascapital or human resource.

Second, we consider the relationship between development and sustainability. We do thisin the light of the growth in population, which will rise from something over 6 billion in2000 to, perhaps, 8 bn by 2020. The relations between the poor and the rich will be

closer-coupled than ever before in history. The relationship will remain lopsided insofar as wealth, power and access to knowledge will also be asymmetrical. Each will, however,want things of the other and both will have the capacity to do the other harm.

Disparities and similarities.

There are various ways of segmenting the situation in which people finds themselves: byincome and by attitude, by age and by nationality. We discuss some of these approacheselsewhere. However, how we think about divisions often define our approaches tosolutions. Economic differences around the world are typically thought about in nationalterms: that country A is richer than country B. We collect statistics which re-enforce this

view. However, it may well be that the nation is the wrong focus, and that we need tothink in a more subtle way in order to see what is going on.

In the period up to the industrial revolution - and, indeed, probably to the middle of theC19th - social class was the key discriminator. A Chinese mandarin and British countrysquire may each have enjoyed a standard of living which was closer to the other than itresembled that of their nation's peasantry. Since around 1840, however, national wealthhas become sharply more differentiated, and the most effective segmentation has been

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that of political boundaries: the mean and statistical way points by which wealth wasdistributed amongst - say - Americans became increasingly distinctive when compared tomost of the rest of the world. Whether co-incidentally or not, this event coincided withthe growth of national identity and nationalism. Per capita incomes are thought to havediffered between nations by, at most, a factor of three in 1820. This had risen to 35:1 in

1950, 44:1 in 1970 and 72:1 in 1992. The disparity is around 100:1 in 2000.A century ago, 'development' was seen as something extraordinary, and poverty the norm.Today, the wealthy world spends around a third of its income on internal poverty relief,and there is a growing tendency to view poverty as something to be eliminated. Greatprogress has indeed been made: in the twenty years since 1980, the proportion of stuntedchildren in the poor world fell from 47% to 37%, according to the UNDP, whilst thosewith access to safe water rose from 13% to 71%. Life expectancy in the poor nations hasrisen by 10 years and adult literacy has also risen, from about half to three quarters of thepopulation. School enrolment has risen by similar proportions.

On the negative side, people are still treated as property in many parts of the world andthere may be more de facto slaves alive than ever before in history. Around 100 millionchildren live on the streets and about the same number, in settled accommodation, haveno access to schooling. There are about quarter of a billion child labourers at work, oftenunder extreme conditions. Some 1.2 million girls are used in prostitution and 300,000children are currently fighting as soldiers. Six million have been injured in armedconflicts during the 1990s.

Sub-Saharan Africa has grown less rapidly than its population since 1950, and its citizensare thus individually poorer than they were half a century ago. Forest have been felled,mines exhausted and the natural wealth lessened in this period. Asia, by contrast, was of a

similar wealth to Africa in 1950. Its economic wealth per capita has increasedsubstantially. Studying this, the World Bank was able to show a pervasive influence of institutions and social organisation in what had happened. Africa had failed to organiseitself to grow its capabilities and to extend its options. Asia had, in part, succeeded indoing this. The next section reviews what this may have entailed

The development process.

Elsewhere, we have reviewed the fundamentals of economic growth, noting that this isone easily-measured facet of something much more complex: the growth of the generalcapabilities and complexity of a society. The economic element depends markedly on the

functionality of all of the other facets.Development appears to occur when a number of necessary components are put in place,and the equivalent checks have been removed. To grow, a plant needs air, light, water,the correct temperature, mineral nutrients and the like. Any one of these can be a limitingfactor and restrict the plant's growth. When the supply of any one of these is limiting,then adding what is needed or otherwise adjusting the system to correct the limit willproduce a burst of growth. Injections of capital, the creation of security or a change in

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political balances may correct something which was limiting in the social fabric of anation, and a burst of activity will follow. Much of the early literature on developmentextrapolated from individual events of this sort to general - usually economic -prescriptions. We now know that his is an inadequate approach. Nations which arelimited in one particular manner - as was, perhaps, China during the cultural revolution

and its aftermath - may show rapid and multifaceted growth once this constraint has beenremoved. Nations in which very few of the required features are in place will, by contrast,prove refractory to almost all interventions. Nothing happens because too many links inthe necessary systems have yet to be put in place.

What, in broad terms, are these features? They fall into three major categories: themaintenance of stability, constructive economic change and overall social cohesion. Weexamine these in detail in a moment. Each of these elements consists of manycontributory parts. Most of these form cross-links between these categories. Takentogether, however, these factors create a system which gives rise to the phenomenon of development. In essence, a complex system - the society - is able to become more even

complex only when all of the parts that are necessary to is adaptability are firmly inplace. When they are not, then local systems of governance and the scope of individualaspirations are limited to relatively simple and established horizons.

Malfunction or weakness within the individual parts of the overall developing systemnaturally put a brake on development. Removing one of these limitations may create aspurt of activity. Such responses have led to many false dawns, in which the key todevelopment is seen to be anything from rural credit to female emancipation. Each of these has a role to play, but it is a role within the evolving complex system, not a magicbullet that will kill all ills. In addition, however, there are specific pathologies - such asthe pervasive influence of corruption - which create their own, self-contained systems,

and these actively oppose constructive change. We discuss corruption later.External events may help development or they may hinder it. The terms of trade whichare currenlt expereinced by the exporters of primary products - that is, by most of thepoor or agrarian nations - are worse than they have been for fifty years. The developedcountries have often established tariffs against manufactured goods, making it harder for the poor nations to add value to primary products, such as leather, cotton or metals. Inaddition, many industrial nations subsidise their domestic agriculture, often to the extentof over-producing food which is then placed on world markets or shipped as aid. As aconsequence, world food prices are depressed, to the detriment of the world's peasantfarmers. In addition, where food aid is made available over protracted periods, localproducers may be driven out of business. Nevertheless, both the world's spectacular development successes and its failures have been conducted against against thisbackdrop, so it cannot be entirely or even primarily responsible for either of these.

Let us return to the factors which drive development. Statistical analysis shows thatstability is the most influential of these three components. The term 'stability' can be usedin two senses. A nation (or firm, or social group) can be unchanging and predictable if itis paralysed by an oppressive force or an intractable problem. By contrast, a structure

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may be stable because it reacts flexibly to change: its surface manifestations change, butthe core is retained and continues to inform its actions. This second kind of stabilitycreates the conditions for economic development . It affords a framework within whichindividual agents can operate in confidence, knowing that the society will continue tofunction within well-understood guidelines, despite its continual re-adjustment to meet

changing conditions.Stability and predictability.

Political institutions that generate dynamic stabilitySeparation of powers: checks and balances, all under the lawSuccessful management for overall economic stability.Infrastructure provision, including human skillsMilitary security and a stable civil operating environment

Competition and renewal.

The 'right' pace of change, balancing erosion with renewalAppropriate human resources supply, including labour marketsConsumer purchasing power, confidence and saving

Social cohesion and paths to self-betterment.

Cohesion: tolerance across vertical and horizontal dividesAccess to political representation and dispute resolutionPolicing and security of property, tenure and person.Access to and equality before the law

Access to education and informationAccess to work, security in work, transitions between work Management of the extremes of inequality

This is a protracted list and it is beyond the scope of this site to explore it in detail. TheWorld Bank development reports, UNDP reports on Human Development and relatedpublications offer detailed insight.

The key insight to be gained is how complex a process in involved, and how many thingsneed to be 'got right'. The balance between these component parts need to change asdevelopment proceeds, and very fast economic growth may, for example, through

balances which used to work out of alignment. For example, the informal networks thatcharacterised decision-taking in the public sector in many Asian countries cease to work once the society becomes more complex and more coupled to the outside world.Internally, they cease to work because the now-educated majority are not prepared to be'managed' by an oligarchy. As the society couples to the outside world, too, the checksand balances amongst the oligarchs weaken. They find capital and partners overseas, andcollectively undertake actions - such as borrowing, or capacity extension - which prove

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disastrous. Previous systems - of quite discussions in clubs, in possessing a sharedintuition of who was doing what - no longer function.

New institutions need new systems of governance. Studies of banking crises indeveloping countries show that these consume the equivalent of decades of economic

growth. Their affects may last for decades, as is presently the case in Japan. The Asiancollapse of 1998 - and the Japanese crisis of 1987 - stemmed from inadequate controlsand from poorly formed views amongst the actors as to what reasonable. "Development"is, for the wealthy as much as for the poor nations, a matter of increasing the social,economic and political complexity of their societies so as to be able to cope withincreased volumes and options in each of these areas.

Figure 1: Long-run paths to development.

The figure shows a well-respected index that the United Nations has established for social development: the human development index, or HDI. This has been estimated for the currently-industrial and currently-poor nations for the years 1870, 1930 and 1995.This is plotted against the relevant income per capita for these years. The resulting arcshows that all nations go through much the same stages of human development as theygrow richer.

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Figure 2: Increasing levels of transparency of governance with income.

The change in governance which is necessary with increasing social complexity issuggested by Figure 2. This plots a reasonably objective measure of probity in public andcommercial life against income per capita. A very similar relationship is found withmeasures of risk, as assessed by capital markets. Low income countries are volatile andrisk, have weakly enforced standards and, very often, have poor levels of enforcement of property rights and commercial agreements. Attempting to estimate the impact of this, theWorld Bank found that nations which had strong laws of contract and strong enforcementof these tended to re-invest about 30% of national income. Nations which scored poorlyon one of these measures re-invested around a fifth of national income, whilst nations

which scored well on neither of these measures invested at less than replacement rates.That is, they ran themselves down as a wealth-generating engine, for lack of confidencein their own systems of management. Foreign direct investment followed closely similar patterns. Over four-fifths of the net inward investment went to only eight countries of the150-plus developing nations. These had shown themselves to be 'safe pairs of hands'.

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Figure 3: Low income countries deliver 'difficult' work forces.

It is a mistake, too, to imagine that labour relations are somehow more natural in poor nations than in wealthy ones, or to contrast a 'lazy' workforce in the wealthy world withtireless hands elsewhere. Figure 3 contrasts entrepreneurial views of the Asians Tigers,Japan and Chine in 1995, before the economic collapse of the region. The habits of work 

(and of handling work forces) have to be learned.We can take from this two thoughts. First, that development is a complex processwhereby systems are built to handle increasingly complex societies; and the capacity tobuild depends on the coherence and integrity of what has been done so far. Second, howsocieties are integrated into the world community depends on how well they haveestablished these structures and how well the 'sell' themselves. Increasingly, however,even where there is economic predictability, for example, factors such as excessiverepression, child exploitation or local environmental damage may damage externalrelations. Firms will not wish to build relationships where NGOs and others may point tolocal malfeasance. In general, however, societies which tolerate extreme exploitation are

unlikely to prove prospects for long-term growth, or useful short-term partners inanything but a one-off relationship.

Corruption is a significant problem for all nations, but it can hugely undermine societieswhere complex systems of governance and scrutiny have yet to be put in place. It strikesat four levels.

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• Funds are stolen and taken overseas, often at levels which are comparable withnet investment. Executive power is abused to raise loans, where default either precipitates a banking crisis or leads to unsustainable overseas debt.

• Decisions are taken on poor grounds: bridges are built where they are not needed.Such 'pork' projects are almost never given maintenance funding. Nepotism is

commonplace: relations are promoted to jobs which they are unable to performsatisfactorily. Ethnic groups come to dominate key ministries and other areas,such as the military, which they then exploit for sectarian purposes.

• The population lose trust in civil society: law is for the wealthy, the state is apredator, the police and minor bureaucrats sell permissions to operate and comeinto the average life in order to extract a fee.

• Tax evasion impoverishes the state, and regulatory evasion cripples its capacity todirect and operate. Figure 3 shows the scale of this in the very poor nations.

Figure 4: Poor nations may recovery only 20% of the tax due to the state.

The separation of powers has proven to be a major component in the success of thecomplex nations. Oligarchic interests cannot capture the reins of power so easily. Thevarious organisations are set into effective competition with each other, forming allianceswith the citizens as a whole, offering critique and accessing distinctive views of theworld.

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Figure 5: Autocracy on the wane?

This necessary pursuit of pluralism is reflected in the political complexion of the nationsof the world. Despite an extraordinary increase in the number of political units, the trendaway from autocracy has been pronounced since the fall of the Soviet Union and, notindependently, since the drive by the international agencies to bring pluralism to thenations which they serve.

Global trade, access to capital and information and the rapid expansion of the basis of educated people will all have a positive effect on economic and social growth. Manynations will begin to play a constructive role in the international community. Most will,however, need substantial injections of capital and managerial talent, intellectual property

and other assistance if they are do so rapidly. The growth in expectations, bred by thepopular media and the impact of population growth, will demand that this progress israpid.

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Figure 6: An unprecedented expansion in the skilled population.

The very rapid expansion in human talent that will become available is shown in Figure6. By 2020, here will be more graduates than there were people living in 1900. Despitethis, it is idle to suppose that the poor nations will suddenly become rich. It is relatively

easy to import the means to add value. It is less easy to train people to play an active rolein this potential. Figure 7, below, shows the focus of complex added value on thetraditional economies, and the logarithmic expansion of scientific production with wealth.The upper figure shows that the nations which create the top 80% of world product - theone billion or so in the wealthy world - create virtually all of the science that is published.The lower panel shows that only the complex economies undertake complexmanufacture. The complexity of which is inherent in various standard UN statisticalcategories is estimated from the number of processes which need to contribute to thefinished good: few, in making hand tools, many in making aircraft. This index iscompared to the development stage of the nations for which this activity is of importancein manufacturing industry.

Figure 7: Complex industry and science have been the perquisite of the rich nations.

The figures confirm the impression that complex things are chiefly undertaken incomplex economies. It is, however, even harder to create the complex framework withinwhich these economies operate. In particular, it is difficult to manage the transformationof an oligarchic society to one with ever-increasing levels of inclusion. Where there are

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few educated people and limited sources of wealth, then natural processes imply thatoligarchy is almost inevitable. Measures of inequality tend therefore to peak asagricultural consolidation reaches its peak, and then fall with increasing wealth,urbanisation and mobility. Such trends are often resisted by clans and classes which haveacquired a privileged position. Change to a more complex society involves ceding

political power to the majority. This is not of itself an easy process. However, manynations start from poorly designed political or administrative institutions, often adoptedfrom a central planning model that was prevalent during the wave of de-colonisation.Such models lend themselves to corruption and tend to distance between the state and thegoverned.

Discussion on the growth prospects of the industrial nations showed the long-run stabilityof economic performance. Work by Putnam et al on Italian city states (and more recently,on US counties) has shown extraordinary long-run correlation between institutions andsubsequent performance.

Figure 8: Measures of civic involvement - courts, drainage provision - in Italian city

states affect economic performance many decades later.

The implications of this are threefold.

• First, the performance of the developing world is largely contained in thestructures which have already been put in place, and foreseeable changes which

may occur within these. Modernisation of institutions is a gradual process, andthis will set the limits to what can be achieved.• Second, the pace of achievement - and the shocks and irregularities imposed by

weak institutions - may well prove frustrating to the citizens of these countries.There may be civil disturbance as a result of this, but without understanding of what change is needed, the likelihood of its being achieved by accident is low.

• Third, those wishing to improve the lot of these nations have a complex task ahead of them. Intervention always touches that which matters most if it is to be

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successful. But some form of intervention - in macro-economic management, for example - are more 'sanitary' than the political reforms which are, in manyinstances, needed. Appetite to engage in this seemingly bottomless ocean of problems may be limited.

We have made some estimates in the potential change in per capita income over theperiod to 2020. The result of doing this is shown in Figure 9. The nations are divided intoa number of homogenous groups. Individual nations are projected forward, based on their economic performance and population growth during the past 20 years. The three casesshown have these rates adjusted progressively to the best in their group's historicalperformance, the worst or a median position. The aim is to give a sense of the dispersalthat it is reasonable to anticpate, not a forecast.

Figure 9: Prospects for 2020.

The figure shows nations stacked from the poorest (left) to the richest (right) in 1997. Theline shows how income per capita stood in 1997. The three cases are as explained above.The population of the wealthy world is contracting and so incomes rise rapidly, despitemodest growth. The field opens for the middle income nations, but the four billion or so

people living in the poor world see scant improvement on a per capita basis, much asAfrica has stagnated during the previous half century. One billion get richer, two billionundergo unstable fast change that is highly policy-dependent and about four billion seelife getting progressively less tenable.

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Stability and sustainability.

We have reviewed the impacts of instability and poor international security elsewhere.We have also discussed environmental issues elsewhere. In brief, close-coupling of theworld means that what occurs in one part of the globe - a biotechnological accident, and

economic miscalculation - can impact widely and rapidly. It may well be that that theprospects that have been outlined in the previous section prove difficult for those notpreviously connected to the poor world.

Figure 10 poor nations tend to be less sustainable than rich ones.

It is a fallacy to imagine that poor nations operate innately sustainable economies. World

Bank estimates, shown in Figure 10 suggest otherwise. Plant run at very low levels of efficiency. Machinery and vehicles are often obtained second or third-hand from Westernsources (or form the former Soviet bloc) and the efficiency of these reflects their age.Primary activities, such as agriculture and mining, are often conducted in damagingways. Traditional slash and burn agriculture, for example, leads to erosion, soilimpoverishment and the destruction of the resource. Most of the Mediterranean wascovered in lush forest after the last period of glaciation. The craggy, limestone-dominatedappearance which we have learned to expect is human in origin, as are the downlands andmoors of Northern Europe

By 2020, in the order of two billion people will have shifted from the use of theoretically-

renewable sources of energy, such as wood and dung, to traded energy such as oil,electricity and coal. They will do this from preference, because the sources of wood havebeen destroyed or because they have moved to cities, where there is scant alternatives. Aperson living on the edge of survival uses around half a tonne of oil equivalent per annumin order to cook, light their nights and get about, as well as embodied in the plastics andmetals that they use. Two billion people therefore use nearly 20 million barrels of oilequivalent per day. The capital implications of the required plant are devastating. Theforeign exchange needs to pay for imported fuel will be huge (energy prices may well be

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higher than they are today.) These are, however, only proxies for the housing, water andsewerage, transport, health, education and other needs that must be afforded by some of the poorest people on the planet.

Energy demand is the product of economic activity and the effectiveness with which

value is added with respect to energy - the so called 'energy intensity'. The industrialworld has cut its intensity for a long period, and its demand for energy has remainedstatic. Much the same can be said for its use of other primary goods: metals, for example,are efficiently recycled in most economies. The absolute volume of economic activitywill more than double in the industrialising nations over the period, and these nationshave yet to make corresponding efficiency gains. Indeed, they celebrate their new wealthwith air conditioners and vehicles, increasing their demand. Figure 8 shows the trajectoryof a number of countries in the 1960-92 period, during which time both tier income andtheir car populations normally increased. All follow broadly the same 'salmon leap', withsome undershooting (Korea, since corrected) and some overshooting (Argentina, due tothe peculiarly isolationist policies of successive government.

Figure 11 vehicle populations tend to expand in a common manner with increasing

wealth. 

Sustainability demands efficiency. Efficiency - particularly in the economic contextwhich we have discussed - demands immense investment, far more than either aid or domestic saving can provide. Thus sustainability requires the opening of developingeconomies to global drivers to best practice, inward investment and rapid economic

change. Unfortunately, as we have seen, such processes are predicated absolutely uponcredible domestic institutions political and economic predictability and minimal