What Type of Economy Does Afghanistan Have?

Afghanistan has a primitive type of economy dependent on agriculture, the illegal opium trade and foreign aid. Though its abundance of natural resources such as natural gas, petroleum and many types of minerals has the potential to make it a wealthy nation, due to decades of war, little infrastructure exists with which to exploit this abundance.

The Soviet invasion in 1979 followed by almost constant war, along with the repressive regime of the Taliban, has left Afghanistan's economy largely dysfunctional. Since 2001 when the Taliban regime fell, the economy has improved mainly through large infusions of foreign aid. Agriculture is mainly at subsistence level, with the exception of the opium crop, which in some provinces is the main source of income. Weak government control, rampant corruption, lack of public infrastructure, widespread criminality and shortage of clean water, housing and electricity contribute to slow economic growth. The unemployment rate hovers around 35 percent.

Improvements since 2001 have been significant. Life expectancy has increased by 15 to 20 years, girls as well as boys attend school, overall school attendance has increased, and the electricity network and the nation's road system have both vastly improved. A World Bank transition study suggests that Afghanistan's continued economic growth depends on a stable security situation.