Conflict and Poverty in Afghanistan's Transition

37 Pages Posted: 11 Nov 2016

See all articles by Vincent Floreani

Vincent Floreani

World Bank - South Asia Chief Economist Office

Gladys Lopez-Acevedo

Lead Economist

Martin Rama

World Bank

Date Written: October 17, 2016

Abstract

Despite record economic growth for more than a decade, poverty has remained stubbornly high in Afghanistan, especially in the regions that suffered less from conflict. This paper aims to explain this paradox by combining a model of conflict intensity at the province level over period 2007-14 with a model of consumption at the household level in 2011. Provincial data show that higher levels of conflict were positively correlated with both a larger presence of troops (international and Afghan) and larger aid flows. Household data show that the negative impact of conflict on consumption was more than offset by the positive impact of aid and troops. According to the estimates, Afghan troops contributed more to poverty reduction than international troops, possibly because they spent more locally. The paper uses the estimated models to conduct an out-of-sample validation exercise, focusing on the transition initiated in 2014. The results should be interpreted with caution, as the quantitative models cannot account for strategic shifts in the insurgency and watershed political developments. But they suggest that the reduction in the number of international troops and declining foreign aid flows led to an increase in conflict intensity and a decline in consumption per capita, matching current trends.

Keywords: Conflict and Fragile States, Economic Growth, Inequality, Industrial Economics, Economic Theory & Research

Suggested Citation

Floreani, Vincent and Lopez-Acevedo, Gladys and Rama, Martin, Conflict and Poverty in Afghanistan's Transition (October 17, 2016). World Bank Policy Research Working Paper No. 7864. Available at SSRN: https://ssrn.com/abstract=2867624

Vincent Floreani

World Bank - South Asia Chief Economist Office ( email )

1818 H Street, NW
Washington, DC 20433
United States

Gladys Lopez-Acevedo (Contact Author)

Lead Economist ( email )

1818 H Street
Washington, DC 20433
United States

HOME PAGE: http://www.worldbank.org/en/about/people/gladys-lopez-acevedo

Martin Rama

World Bank ( email )

1818 H. Street, N.W.
Washington, DC 20433
United States

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