مهدی حاج امینی

Both Afghanistan and Bangladesh have a per capita income below $500 early 21st century, but now Bangladesh’s per capita income is more than 3 times that of Afghanistan. Surprisingly, at the beginning of the period, Bangladesh have worser than Afghanistan in the corruption perception indices, and hence a small government has been sufficient to experience high economic growth. However, emphasizing small government such as that promoted by the World Bank’s 1980s model is not suffice for low-income, resource-scarce, landlocked countries like Afghanistan. In such contexts, institutions are not capable of transforming financial resources into effective public services. Using Paul Collier’s framework, this paper evaluates how institutional performance and economic policies function in Afghanistan’s failure to achieve development. The aim is to examine the undevelopment trap of bad governance and ineffective policies in Afghanistan. The period 2005–2019 divided into three five-year sub-periods and then each sub-period is analyzed by a stylized-facts-based approach. The findings indicate that during the first period (2005–2009), the economic management had the strongest performance with an average score above the threshold 3, while criteria of the public sector management and institutions had the weakest performance, scoring below the threshold. Since the average of all indices was remained consistently below the Collier’s threshold, it is concluded that Afghanistan entraped in a bad governance trap. This trend is been continued in the second (2010–2014) and third (2015–2019) periods, albeit criteria structural policies, instead of public sector management and institutions in the first period, has worst status.