The economic fallouts of air corridors

Monday, 07 May 2018 02:53 Written by  Read 88 times

There is no doubt that Afghanistan needs to shrink its trade deficit by ramping up its exports in order to achieve economic self-reliance. However, it is not possible to boost exports without the expansion of trade relations, one that hinges on rationality. Under what it called the expansion of trade ties, the National Unity Government (NUG) inaugurated several air cargo corridors with some countries in a bid to freight Afghan products to foreign markets by air. Recent reports suggest that the government has suffered tens of millions of dollars in losses in the initiative because it was paying a lion’s share of the rent of the exporting goods.
Although the move, at first glance, seems to be a positive step in support of exports, it has proved counterproductive. Traders and producers need government support, but such support should be foundational and one that can end their dependency on government in the long run, and help them to finally become self-reliant.
The opening of air corridors is not a foundational solution because exportation by air is the most expensive form of commerce. The higher the costs of exports, the lower their competitiveness, and profits to producers, especially in today’s competitive market where producers are trying to offer high quality products at a low price to their customers. All nations around the world are trying to reduce the transportation costs of goods by implementing infrastructure projects and expanding relations with other countries; therefore, reliance on air trade has no economic logic. NUG leaders, who had economic growth and development at the core of their election campaign promises, have taken some steps that are not fundamental, one of which was the inauguration of air corridors-- an experiment that seemed a total flop from the very beginning. However, the government has used it as a propaganda tool to change public perception in its own favor.
If government leaders are serious to increase the balance of exports, it has to invest in infrastructure projects. The government support for producers and industrialists, to date, is on paper. Right now, there are large capital outflows from the country solely because the atmosphere is not conducive for investment. Furthermore, many businesses have collapsed across the country because of a lack of government support. The funds allocated to failed projects such as air corridors should be spent on areas that can tackle the existing challenges faced by Afghan producers. Exportation is the second step to take.

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