Economy in Afghanistan

An economy is a system of resource management in which people create and sell

commodities and services. Every country has an economic foundation, a governmental policy

that acts as a foundation for the distribution of commodities and the regulation of resources that

is never incorrect or right in any way and typically, they adhere to the patterns of usage and

consumption that define society and communities. If we look at the types of economic system,

there are three economic systems that are widely used in today’s world, a Free Market economy,

in which economic planning is scattered and decentralized. There is no central planner or central

bureau "in charge" of what the economy does in market economies. Instead, innumerable

individuals, workers, homes, businesses, and other decision-makers develop their own plans for

what to buy, what not to buy, how to invest, how much to save, and so on, based on their

objectives, available knowledge, and incentives (Brennan, 2019). The second type of economy is

the State-Sponsored Capitalism, which refers to forms of capitalism in which the government has

a significant role in overseeing and administering capital accumulation, as well as directly

owning and controlling capital (Alami et al., 2021). Since the early 2000s, state-owned

companies (SOEs), policy banks, sovereign wealth funds (SWFs), national oil corporations, and

other state-sponsored firms have emerged as major engines of global economic activity

(Bremmer, 2009). Lastly, we have a Mixed Market economy, which is made up of hybrid

businesses that draw on both ethnic and non-ethnic resources and have both formal and informal

organizational structures (L, 2009). Their marketplaces are boundless in terms of geography and

ethnicity. Manufacturing, specialty retailing, and consumer and producer service providing are

examples of their companies, which are not limited to conventional retailing. In this paper, I will
argue that a Mixed Market economy would be the best economic structure in the context of

Afghanistan.

Firstly, Afghanistan’s current economy outlook is stark, there is a higher rate of poverty

than what it was before, to stabilize the economic structure, mixed market economy should be

implemented where products and services be delivered to those who need them the most, it

provides for the measurement of supply and demand through prices (The World Bank, 2022). If

the government is left in control when the essentials are scarce to control or keep prices stable,

their measures will only result in vain and will simply lead to conjecture and black marketing.

The only option is to respect the income elasticities of demand for basics and supply the staple

food items in adequate quantities on that basis to keep prices stable. To make sure that the

mentioned option is effective, a comprehensive agricultural policy, including institutional

measures dealing with land tenures, technical aid, and investment, should be included in the plan

in which the challenges of peasant agriculture should be given the highest priority (Sachs, 1968).

As the country is struggling economically, the least expensive ways of achieving the triple

objective should be looked at, in which case it would be activate peasant farming and tap into its

underutilized potential, which consists primarily of family labor with little external investment,

of increasing the supply of essentials, slowing rural migration to cities, and expanding the

domestic market for industrial goods, which includes agricultural inputs such as fertilizers,

pesticides, building materials, and equipment, in addition to consumer goods (Sachs, 1968). One

of the most significant long-term goals of a mixed market economy in a country like Afghanistan

is to transform a subsistence-oriented peasant economy into a market-oriented one while

simultaneously modernizing it.

 Secondly, a major benefit that mixed market economy can provide to help improve its

economy, is the government regulations over the businessmen and tradesmen. Government

regulations are guidelines that businesspeople must adhere to when executing their operations.

These standards are in place to ensure that no one has an unfair edge in the marketplace and that

firms do not deceive customers. Interest rates and other elements that have a broad impact on the

economy are also manipulated through various forms of regulation. The presence of property

rights is the most basic assumption of a market economy's regulatory system. The government

must ensure that property rights are protected in the economy, resulting in a smooth market.

Property rights must be clearly established and accepted by all parties, these rights are respected

by both state and nongovernmental agents, who rarely interfere with or overcome them (L,

2009). Owners do not anticipate the government seizing their private property. As an extreme

example to prove the arguments, intellectual property rights require definition and protection,

and the government must act in the market to achieve this (Petr, 1987). This is a major problem

in Afghanistan where most of the properties are seized mainly due to property rights not being

clearly established or the businessmen deceives other individuals that are planning on buying or

renting property, in this context mixed economy system with government regulation and

intervention would be best fit as it would ensure that no inequality or unfairness is done to any

individual.

Lastly, the current government of Afghanistan has put themselves primarily in charge

with full control and regulation which has impacted private market as they do not have the

freedom to operate on their own. In Mixed Market economy, there would be equal distribution of

control, as the government would have less control and regulation (Petr, 1987). This allows the

private sector to flourish, operate, extend, and grow. Because the majority of the business is
entrusted to private firms, a significant amount of service will be provided by organizations other

than the government (Petr, 1987). Services that do not benefit the private sector, such as utilities,

libraries, hospitals, roads, and social security, are, on the other hand, left to the government to

manage which should be their primary concern. This in turn, would help the Afghanistan’s

economy grow as a country relies on private firms to provide services.

To conclude, mixed economy is best suited in the context of Afghanistan, as the current

economic state of Afghanistan is unstable, it will help with keeping prices stable, help keep and

regulate property rights, and equally distribute control. I believe by implementing mixed market

economy system will make Afghanistan’s economy stable.

 References

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