How states flail and fail: What Modi and Shah could learn from the Afghanistan tragedy

For those wondering, if there are any sub-regional or national lessons for South Asian nations to draw from Afghanistan’s own condition after the US military pulled out and the Taliban took over the country, the clear answer is: Yes, there are.

These lessons related to internalising processes of “state-institution building”; the need to avoid coercive forms of top-down governance without local cooperation and community support, and recognising the counterproductive economic effects of heavy foreign aid dependence.

Let’s begin with the last point first.

As a noted economist recently pointed out:

“Foreign aid is a steroid. It can protect against, and help with recovery from disasters, humanitarian crises, pandemics, disease outbreaks. But it does not facilitate economic transformation, and can-do huge damage when it’s magnitude rises to double digit levels of GDP. Countries that have shaken off aid addiction have done so due to leadership that made ‘exit from aid’ a strategic objective. That’s the big difference between Pakistan and Bangladesh, Cambodia and Vietnam.”

Afghan economic growth started stalling after 2012, once foreign aid started receding, from a high of about 50% of GDP (largely being remitted from the US to finance its war). The big injection of foreign money or investment did not translate into sustainable domestic growth.

As foreign money artificially…

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