Abstract

Despite the strategic location of Afghanistan, its vast natural resources and tremendous potential in the agriculture sector, the export sector is still underdeveloped. Restrictions on export competitiveness and growth remain due to structural constraints, such as inadequate infrastructure, limited export diversification, weak institutional capacity, trade-related restrictions and limited access to finance. While several studies have looked at individual factors impacting on Afghanistan's trade sector, little empirical work has focused on the interplay of macro-economic, institutional and infrastructural influences on export performance using more recent data. This study aims to bridge this gap and aims to analyse the main factors influencing Afghanistan's export performance and suggest policy recommendations based on evidence to support the export sector in Afghanistan. The study is conducted with annual time-series data from 2005 to 2025 and uses the Ordinary Least Squares (OLS) model to estimate the impact of economic growth, infrastructure, trade openness, exchange rate, and institutional quality on exports. The findings show that the development of infrastructure and trade openness have positive impact on export performance and exchange rate instability on exports have negative impact. Economic growth is also positively related to export growth, while there is positive but non-significant relationship between institutional quality and export growth. The findings also suggest that export activities in Afghanistan are still highly dependent on primary commodities, further reinforcing its vulnerability to external shocks. The novelty of this research is that the analysis of macroeconomic, institutional and trade determinants in one empirical framework has been performed with the latest available data for Afghanistan. The results suggest direct policy recommendations for policy makers such as export diversification, infrastructure investment, trade facilitation, regional trade integration, macroeconomic stability and institutional reform to improve export competitiveness, decrease external dependency and boost sustainable economic growth.

Keywords

Afghanistan Export Sector Infrastructure Trade Openness Exchange Rate Institutional Quality