Transportation Infrastructure & the Economy
Effect of AfPak's investment into Transportation Infrastructure and the translated effect on the economy
December 29, 2015
Mahdi Gokal – Primary Article Contributor
Harrish Sinnadurai - Primary Article Contributor
Nathaniel Sukhdeo – Team Leader following AfPak
Keywords: AfPak, investment, infrastructure, economy, development, silk road, Afghanistan
Afghanistan, a nation embroiled in political and economic instability, has come a long way since the turbulence of 2001, showing a modern willingness to embrace the ideas of peace, pluralism and prosperity. This has translated into Kabul establishing itself as the fifth fastest growing city in the world. Spurring this rise are the recent developments in the transportation infrastructure of the country. These include proposed regional infrastructure projects such as the Turkmenistan-Afghanistan-Pakistan-India pipeline, as well as the Central Asia – South Asia Electricity Transmission project (CASA 1000), which will help to create conditions for sustainable electricity trade between Tajikistan, Kyrgyzstan, Afghanistan and Pakistan. Moreover, a large variety of visionary continental infrastructure projects have been proposed within Afghanistan supported by the wider international and trans continental community. These projects include: The Silk Road Economic Belt led by China; The Middle Corridor or Modern Silk Road led by Turkey; The Silk Wind initiative, involving Kazakhstan, Azerbaijan, Georgia, and Turkey; The Maritime Silk Road, involving China, the Gulf Cooperation Council, and other Asian countries; and The New Silk Road initiative supported by the United States. Moreover, financing from the Asian Development Bank reached US$1,015 million and grants totaling US$2.9 billion align with government’s priority infrastructure sectors – transports, energy, and natural resource (note: members of the ADB’s Afghanistan project include the US, UK, and Japan). Additionally a deal with Kazakhstan has been reached to help supply the agriculture and steel needs of Afghanistan. These new initiatives represent the increasingly growing international and regional confidence in Afghanistan’s political and economic climate. Moreover, these projects represent the idea that Afghanistan has the potential to transform into a regional trade and transportation hub within the region. More importantly however, these positive developments within Afghani infrastructure will have an extremely beneficial influence in regards to Afghanistan’s overall economy.
Afghanistan’s current economy is primarily dependent on agriculture, which constitutes 20% of its GDP and involves around 78% of the countries available workforce. The large involvement in agriculture poses an issue to the Afghani economy as not only does agriculture lack any added value but its problem is compounded in the fact that only 12% of its land is arable. Agriculture is not only inefficient but it is also a highly ineffective contributor to the Afghani economy. However, the potential savior of the afghan economy lies in its other important yet highly neglected mining. It has been speculated that Afghanistan contains over 1400 mines, which include precious metals such as gold, copper, uranium and even oil. Afghanistan’s mines nonetheless tend to be located in rural areas, which lack not only transportation oriented infrastructure but also essential social services. It is therefore fair to state that Afghanistan’s weak economy is not to do with a lack of resources; it is rather the lack of transportation infrastructure, which has served to dampen Afghanistan’s economic promise. However, the promising developments in transportation infrastructure are the solution for Afghanistan’s economic and social woes. Ex President Karzai once claimed that mineral deposits in Afghanistan were worth $30 Trillion. It is unknown how Afghanistan has managed to monetize that amount but more importantly, if these proposals are successfully built, Afghanistan’s future as a regional economic hub is promising.
