Despite the news this week of the U.S. military’s major offensive in Afghanistan and the the fact the government has increased U.S. troop levels in Afghanistan to three times 2008 levels, the Obama administration stresses that the primary U.S. emphasis is on economic development and improved governance rather than military operations to destroy insurgents.
Pushing economic development as an anti-insurgency strategy is nothing new. Indeed, it has gotten at least lip service in nearly every U.S. military intervention since World War II. But the results are mixed. Economic development was an important factor in ultimate success in Korea after its war, for example. But elsewhere, including South Vietnam from 1956 through collapse of the non-Communist regime in 1975, self-sustaining economic development never took off.
The problem is that fostering faster economic growth in poor countries is hard and has a spotty record even in peaceful circumstances. An already difficult task becomes more problematic as political violence or open warfare destroy productive resources and create uncertainty.
By way of disclosure, I was an Army clerk in the U.S. military mission to Brazil in the late 1960s when Brazilian forces were suppressing the Araguaia guerilla movement. I later spent 26 years in the Army Reserve as a Latin America specialist. I also worked on a USAID agricultural development project in Peru as the Sendero Luminoso insurgency took off in 1981-1982. Three people affiliated with the project were killed by the insurgents in the year after I left.
So I have some familiarity with the challenges from both the civil and military sides.
Economic development starts with producing more goods and services to meet peoples’ needs. Such increases can come from various sources. Greater availability of economic resources — land, labor or capital — can increase output. Land, however, is pretty much fixed in quantity. A larger population, and hence a larger labor force, can increase total national production, but has little effect on output per person, which is what economic growth is all about.
That leaves increases in capital. Loans and grants from wealthier countries can quickly increase the money available for both the government and private businesses in the target country to invest in new infrastructure, machinery or facilities.
This was what the Marshall Plan and World Bank did with great success in Europe after World War II.
But in the absence of the favorable legal, institutional and social factors Europe enjoyed, injecting more capital into a country often has remarkably little effect. More on this below.
One way to make workers more productive is to invest in basic health and education. The poorer and more backward the starting point for a country, the greater the economic bang for even modest expenditures on childhood vaccinations, infectious disease control, rudimentary health clinics, clean water and broad-based elementary education.
The experience of such efforts in East Asia and 1960s economic wonder countries such as Brazil and Iran shows how such efforts can make dramatic changes in productivity as well as the quality of people’s lives. Even Iraq under the Baathist regime successfully used its oil revenues in such efforts.
But many other countries, especially in Africa and South Asia, haven’t had much success in pulling off even this basic phase of development. Afghanistan is one. And key physical infrastructure like clinics, schools and water systems is a highly visible target for insurgents. There are few ways more effective than blowing up a new school to demonstrate to villagers that the government is impotent.
Many countries that grew successfully, including Korea, Taiwan, the Philippines and Brazil, used sharp increases in agricultural productivity to free up labor for urban industry and commerce.
The three Asian countries all had agrarian reforms that reduced the power of the landowning class and gave peasants greater incentives to produce. This is in sharp contrast to Pakistan, where politics and much of the economy are dominated by a traditional, unreformed landowning class that included Benazir Bhutto and her father.
Historically, this also was a problem in Afghanistan where, prior to the 1979 Soviet invasion, 5 percent of the landowners controlled 45 percent of the land. But the aftermath of the scorched-earth tactics used by the Soviets and by all sides in the subsequent civil wars rendered land tenure problems secondary to repairing destroyed villages, dams and irrigation canals.
Given the austere topography of Afghanistan, where only 12 percent of the land is arable, don’t expect dramatic improvements in agriculture to spur the national economy as a whole. And agricultural extension personnel are as vulnerable to assassination as school teachers.
At the end of the Korean war, in 1953, South Korea was as poor and devastated as Afghanistan was when we ousted the Taliban in 2002. So was Taiwan in 1949. These countries’ subsequent economic success are among the miracles of the modern era.
Neither Korea nor Taiwan followed pure free-market policies. And for years, both suffered from virtual dictatorships and some degree of government corruption. But both had governments that were honest enough and effective enough to provide a fertile bed for business growth. In both there was an institutional and cultural framework that could put new capital to productive use. But that was not true in countries like Nigeria and Bangladesh or, historically, in Pakistan or Afghanistan.
Both Korea and Taiwan were coastal nations and had a ready export customer in a military partner, the United States. Both had ethnically and linguistically homogeneous populations, particularly in comparison with South and Central Asia. Developing a similar export manufacturing sector in Afghanistan would be a daunting task.
As my mother would say, we should hope for the best but expect the worst in the economic development of Afghanistan.
2009 Edward Lotterman
Chanarambie Consulting, Inc.