Thread by @AtifRMian

Some broad takeaways for development from 20 years of Afghan economic experience

The Afghan economy stalled in 2012 after foreign aid started receding from a high of about 50% of GDP.

The big injection of foreign money did not translate into sustainable growth. Why?

Because foreign money artificially raised domestic spending power - artificial in the sense that it was not associated with increased domestic productivity

We can see this in Afghan trade statistics. Imports rise three-fold, while exports are stagnant.

There was a temporary spending boom, that vanished when foreign flows dried up.

The spending boom is actually harmful when it is artificial, because it hurts exports via real exchange rate appreciation and other misallocations

It's a story that is unfortunately not atypical

The focus should have been on investments that raise productivity of Afghan farmers e.g., and other inclusive growth measures.

Instead despite aid reaching as high as 50% of GDP, fraction of people living below poverty rose from 34% to 55%

The broader lesson for under-developed countries is that you cannot import development

Development requires finding ways to increase the productive capacities of your own people

To learn to "build stuff" better and more efficiently - to learn to cooperate with one another, so the sum of our efforts is larger than its parts - and to try to not leave anyone behind in this process.