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Afghanistan's Private Sector: Status and Ways Forward

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SIPRI, together with the International Council of Swedish Industry (NIR), present one of the most comprehensive reports on the Afghan private sector to date. Funded by the Swedish International Development Cooperation Agency (Sida), the report is the
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  AFGHANISTAN’S PRIVATE SECTOR Status and ways forward richard ghiasy, jiayi zhou andhenrik hallgren     AFGHANISTAN ’ S PRIVATE SECTOR   Status and ways forward RICHARD GHIASY  ,  JIAYI ZHOU AND   HENRIK HALLGREN   October 2015  STOCKHOLM INTERNATIONAL PEACE RESEARCH INSTITUTE  SIPRI is an independent international institute dedicated to research into conflict, armaments, arms control and disarmament. Established in 1966, SIPRI provides data, analysis and recommendations, based on open sources, to policymakers, researchers, media and the interested public. The Governing Board is not responsible for the views expressed in the publications of the Institute. GOVERNING BOARD Sven-Olof Petersson, Chairman (Sweden) Dr Dewi Fortuna Anwar (Indonesia) Dr Vladimir Baranovsky (Russia) Ambassador Lakhdar Brahimi (Algeria) Jayantha Dhanapala (Sri Lanka) Ambassador Wolfgang Ischinger (Germany) Professor Mary Kaldor (United Kingdom) The Director DIRECTOR Dan Smith (United Kingdom)  Contents Preface   v   Acknowledgements   vii   Authors’ note   viii   Executive summary   ix   1.   Economic backdrop   1   1.1 .   A brief history of Afghanistan’s economy   1   1.1.1 . The pre - war economy to 1979   1   1.1.2. Soviet invasion, the civil war, and 2  and Taliban years: 1979–2001 1.1.3 . International intervention: 2001  –  14   4   1.2 . Macroeconomic policies   6   1.3. The Afghan economy i n transition   8   1.4 . Conclusions   9   2.   Framing the private sector   11   2.1 . Formal vs. informal economy   11   2.2 . Economic integration   12   2.3 . Private sector actors   13   2.4 . Sectorial conditions   15   2.4.1 . Agriculture   15   2.4.2 . Mining   17   2.4. 3 . Industry   1 8   2.4. 4 . Services   18   2.5 . Government legitimacy and the social contract   19   2.6. Legislation, enforcement   and government policies   21   2.7 . Conclusions   23   3.   Impediments to inclusive private sector growth   25   3.1 . Extra - market conditions   26   3.1.1. The political situation   26   3.1.2 . Business -  political coupling and the issue of corruption   27   3.1.3 . Influence of foreign aid   29   3.1.4 . The regional politico - economic environment   30   3.2 . Economic resources and critical infrastructure constraints   32   3.2.1. Access to land and physical resources   32   3.2.2 . Access to finance   34   3.2.3 . Human resources   36   3.2.4 . Critical Infrastructure   36   3.3 . Limited female economic participation   38   3.4 . Conclusions   42   4.   The private sector and security   43   4.1. The private sector and the securi ty nexus   43   4.2 . Conclusions   47  
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