Governance and Economic Growth in Afghanistan during the Era of US presence

Abstract

Abstract Over the course of its 20-year occupation, was the USA successful in establishing a democratic state in Afghanistan that could improve the quality of governance and boost economic growth? The 20-year USA presence in Afghanistan is examined in this paper in terms of how governance affected economic growth. Along with governance indicators, the effects of foreign aid and the labor force as control variables have also been examined on economic growth. To evaluate the equilibrium between research variables, the ARDL-ECM model has been utilized. The result demonstrates that, in the era of US presence, none of the six world governance indicators over the long term have had a significantly positive impact on economic growth. In the long run, the control of corruption has a negative impact, and in the short run, effective government significantly has a positive impact on economic growth during the investigation period. According to our findings, governance indicators have a much smaller impact on economic growth than population size and foreign aid in both short- and long-run equilibrium. Overall, there was a substantial reliance on human resources and international assistance for economic expansion in the era of democracy. The evidence shows that the association between economic growth and governance was found to be very poor, and the administration in Afghanistan had not been able to stimulate economic growth throughout the US presence. JEL classification: H1, O100