36
Jacksonville State University Country Analysis of Afghanistan Madeline Paris, Abigail Jaskowski, Chloe Cardwell, Kristi Cunningham, and Elizabeth Benefield CBA 396 Lenn Rainwater December 2, 2016

Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

  • Upload
    others

  • View
    2

  • Download
    0

Embed Size (px)

Citation preview

Page 1: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

Jacksonville State University

Country Analysis of Afghanistan

Madeline Paris, Abigail Jaskowski, Chloe Cardwell, Kristi Cunningham,

and Elizabeth Benefield

CBA 396

Lenn Rainwater

December 2, 2016

Page 2: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

Table of Contents

Executive Summary -Abigail Jaskowski..........................................................................................1

Country Overview and History- Abigail Jaskowski.........................................................................3

Natural Resources- Madeline Paris................................................................................................5

Economic Resources and Factors- Kristi Cunningham...................................................................6

Social and Demographic Factors- Madeline Paris........................................................................10

Political System and Political Forces- Chloe Cardwell..................................................................11

Legal and Trade Analysis- Chloe Cardwell....................................................................................13

Cultural Analysis- Elizabeth Benefield..........................................................................................15

References................................................................................................................................... 20

Page 3: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

Country Analysis of Afghanistan

Executive Summary -Abigail Jaskowski

Afghanistan is not overly attractive for exports or direct investment. Due to a lack of

education, there is a shortage of skilled labor. Corruption runs rampant in daily business

transactions, particularly with government regulations, taxation, and the smuggling of illegal

goods into Afghanistan. This corruption stems from a legal system that is struggling to develop.

Because the legal system is unclear and enforced irregularly, this makes it difficult for foreign

investors to decipher their tax laws and government regulations. Overall, the country is poor,

with few industries providing jobs or adding value to the economy; the economy is even

growing at a slower pace than normal. Transport costs are high; poor quality goods and services

coming from China, Iran, and Pakistan serve as sources of competition with their cheap prices.

The infrastructure is currently severely limited, with no railroad, limited and expensive air

delivery services, and only trucks distributing most of the goods. Despite all of these deterrents,

Foreign Direct Investment could still be accomplished if executed properly by entering the

market in small intervals with the assistance of franchisees possessing knowledge and

successful experience (3).

Because of Afghanistan’s general lack of any type of sophisticated infrastructure, they

have been undergoing recent reform in order to efficiently transport goods by water and road,

as well as construction regarding small stores and residential areas. Therefore, exporting

various types of construction materials such as concrete, bricks, steel, and glass to Afghanistan

1

Page 4: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

would be a wise investment for the upcoming years, but not a permanent endeavor, as they are

already several years into intensive reconstruction. Along with the need for materials, the

country is in need of construction services. With the withdrawal of United States troops from

Afghanistan, U.S. military funding for construction has solidly declined. However, there is still

critical demand for domestic housing and commercial construction (1). The majority of

exporting and direct investment opportunities are found in the need for transporting goods and

services. Afghanistan also lacks efficient telecommunication (3). The meat-processing sector

fails to meet international standards, and therefore imports a great deal of meat from the

United States. This sector would be advisable for either exporting or Foreign Direct Investment;

FDI would require investing in the updating of existing facilities in Afghanistan. Considerations

would need to be made as to the specific preparation of these meats and the type of meats

provided, as a large population of Muslims exists in Afghanistan. Muslims do not eat pork and

the cow is revered as sacred, so chicken, lamb, and a limited number of other meats would be

acceptable (4). Other investment opportunities lie in dairy, fruits, nuts, and non-traditional

products. Afghanistan’s climate would allow for various plants to grow, and in turn be used in

markets such as the pharmaceutical sector. There is currently little to no competition in this

area, and presents first-mover advantages (5).

Overall, Afghanistan’s primary needs are found in the most basic of markets. This is an

underdeveloped country lacking a great deal in education, resources, transportation, and

logistics. However, Afghanistan has untapped potential that, if properly and wisely invested in,

could bring favorable return on investment. FDI is highly risky here due to the overall cultural

climate in regard to business, especially with American investors, but still plausible. It would not

2

Page 5: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

be wise to export only to Afghanistan, but to take advantage of all exporting and investing in

countries directly surrounding Afghanistan, such as Iran, Pakistan, Turkmenistan, and others.

However, Afghanistan is gradually becoming more open to FDI; their government is seeking to

turn their economy around and to invest in exporting around the globe (21).

Country Overview and History- Abigail Jaskowski

In 1747, one leader united the Pashtun tribes,

establishing Afghanistan, and creating a zone between

Great Britain and Russia for many years; it finally broke

away from Britain’s control in 1919. During and

following this period of time were many years of

constant war and the unrelenting overthrows of their

government (21). Afghanistan is entirely landlocked,

surrounded by Iran, Turkmenistan, Uzbekistan,

Tajikistan, Pakistan, and China. Though it possesses a mountainous and dessert terrain,

Afghanistan has long been a sought after territory, due to its lying along important trade routes.

It has also had a volatile political climate for centuries, where the government has changed

hands an infinite number of times, leaving the country in poverty and underdeveloped stages.

Afghanistan is around two hundred and fifty thousand square miles and has an estimated

population of roughly thirty million, with nearly seventy-six percent of its people living in rural

areas and conditions. A great majority are simple farmers with miniscule plots of land. The

3

Source: Brittanica Academic (20)

Page 6: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

small portion of Afghanistan that is urbanized is largely due to the driving out of citizens from

rural areas because of war. Kabul, the capital, has seen urban settlements popping up in its

area. Because of constant wars, it has been difficult to get an accurate census of the many

Afghans who have been scattered throughout the country; only rough estimations exist. The

economy is continuing to improve, but still far from stable in comparison to its surrounding

neighbors (20).

In relation to the United States, Afghans live shorter life spans, are more likely to be

unemployed, are more likely to die in infancy due to a lack of adequate health care, and live in

poor conditions. The United States interference with the Afghanistan government and the war

that was waged a very short period of time ago on Afghanistan’s own soil has left Afghans with

a less than desirable perspective of Americans. However, according to the Wall Street Journal, it

is “a fallacy to assume that most Afghans are Anti-American” (20). Therefore, when considering

exporting to or investing directly in this country, adaptation is a necessary endeavor, as it

always is when dealing with a foreign country and market. It is always necessary to adapt your

product or service to best accommodate your target market in the context of their daily

customs and social backgrounds (20). The Afghan culture is rich, but quite a contrast to

American culture. Afghanistan has many different languages, such as Afghan, Persian, Dari, and

Pashto. Over sixty percent of the population is twenty-four years old or younger. The vast

majorities of people are Muslim, and hold strongly to their convictions. All of these are hefty

factors when considering whether or not to export or invest (21).

4

Page 7: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

Natural Resources- Madeline Paris

One of the major contributors to a nation’s economic success is its natural resources.

The goods that a country can naturally produce can give the country an advantage. If a country

has natural resources that other want and or need, it can export those goods. Businesses may

also decide to put a foreign direct investment into a country based on what natural resources

are there. Afghanistan’s primary natural resources are cotton, grain, nuts, and fruits (21). It’s

geography also makes the country have plenty of areas for the grazing of sheep, goats, and

camels (21).

Although Afghanistan is a landlocked country, it has elements to its topography that

make it fortunate. The average altitude is about 1200 meters (21). The Hindu Kush mountain

range has a height of 6100 meters (21). This mountain range divides the northern provinces

from the southern (21). Some of the southwestern parts of the country are deserts, but other

parts contain many small fertile valleys that are perfect for growing the country’s main crops.

(4) There are a few lakes in Afghanistan, but none of notable size (21). The country has four

main rivers. The Amu Darya is located in the north, the Harirud and Morghab are located in the

west, and the Kabul is located in the east (21). Many nations are interested in the primary

resources of Afghanistan. The country’s main exports are fruit, nuts, and wool (21).

The country would be considerably more attractive for business investments due to the

topography and natural resources if it was not for the economic and political factors. Even

5

Page 8: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

though the country is landlocked, it would be a viable entity for international business

regarding the natural resources.

Economic Resources and Factors- Kristi Cunningham

Afghanistan’s stage of economic development is now nearly two and a half times

greater than it was in 2002. Despite their attempts to overcome some economic hurdles they

are still one of the poorest countries in the world. The deterioration of the political structure

continues to destroy any confidence in their economy (2). The hardships they face can

undoubtedly be traced back to the constant wars taking place in the region.

Their inflation rate in 2015 was -1.5%. They have a large underground economy for

opium, which is also their largest export. Opium makes up about half of their exports alone. The

currency for Afghanistan is the Afghan afghani and the currency code is AFN. The exchange rate

is 61.14 AFN per 1 USD (21). The most recently reported gross national income was in 2013 at

59.87 billion USD. Gross domestic product per capita was 1,900 USD in 2015. Gross national

income per capita was reported in 2015 at 630 USD which was a drastic drop from 2013 where

it was 730 USD, see Figure 1.

6

Page 9: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

Source: The World Bank (9).

The citizens of Afghanistan do not have many opportunities for leisure spending

because money is extremely tight and is reserved for necessities. The minimum wage rate in

2013 was 0.57 USD, which means the workers, would earn roughly 5000 AFN per month.

Though the cost of living in the country is relatively low it is not equivalent to the minimum

wage. This made them the third poorest country in the world in 2013 (15).

The country’s imports are machinery and other capital goods, food, textiles, and

petroleum products, which equaled out to about 7.004 billion USD. The largest import partner

in 2015 was Pakistan at 38.6% and the only export partner that is also an import partner is

India. The other import partners were the US, Turkmenistan, China, Kazakhstan, and Azerbaijan

(21). Their exports are opium, fruits and nuts, handwoven carpets, wool, cotton, hides and

7

Page 10: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

pelts, and precious and semi-precious gems. The exports in 2015 totaled up to 658 million USD.

Their largest export partner in 2015 was India at 42.3% followed by Pakistan and Tajikistan; see

Figure 2 (P.11).

Afghanistan is considered to be a heterogeneous society, because the citizens differ so

much from region to region. This is due to the fact that they have both tribal and non-tribal

communities throughout the country. They are a minority’s country since no ethnic group

makes up more than one third of the population (19). The official languages are Afghan Persian

or Dari and Pashto. However, a good portion of the population speaks Turkic languages which

are mainly Uzbek and Turkmen and thirty different minor languages. The Turkic languages as

well as Balochi, Pashai, Nuristani, and Pamiri are the third official language in regions where the

majority speaks them (21).

8

Page 11: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

Source: CIA World Factbook (21).

The primary natural resources are natural gas, petroleum, coal, copper, chromite, talc,

barites, sulfur, lead, zinc, iron ore, salt, precious and semi-precious stones, and arable land.

Many of their natural resources make up their largest exports. The interest rate is 15% as of the

beginning of 2016. They had an extremely high unemployment rate of 35% in 2015. The high

unemployment rate is not necessarily correlated with lack of job capabilities, but most likely

with the difficulty finding and keeping a job in such a volatile, war ridden country (21).

The country relies heavily on foreign aid despite the significant improvement in the

economy in the past few years. Their living standards are among the lowest in the world due to

a lack of what most people consider to be common amenities, like clean water and electricity.

Recent efforts to fight corruption and rebuild the political structure have allowed for more

growth in the economy than they have seen throughout the years of war that have plagued the

country.

Social and Demographic Factors- Madeline Paris

The life expectancy at birth for a citizen of Afghanistan is roughly sixty years (20). This

number has steadily gone up over the last four decades. Although this positive trend is

beneficial for the country, Afghanistan is still the 171st in the world in life expectancy (20).

Literacy rate is defined as the ability to read and write for those over the age of fifteen.

The literacy rate for Afghanistan’s population is about thirty eight percent (12). Only about

twenty four percent of females are literate, while fifty two percent of males are literate (12).

9

Page 12: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

It is widely known that the most prominent religion in Afghanistan is Islam. The

population is almost one hundred percent Muslim (12). This fact affects many other aspects of

the country. Countries who are predominately Muslim usually have less ability to achieve

economic success and personal freedom for the residents.

About twenty seven percent of the total population is considered urban (12). The

number of people who are a part of the urban population is increasing by nearly four percent

every year (12). Even though this seems like a positive trend, the country still has somewhat of

a slum problem. Afghanistan still has many people who have issues finding drinking water

sources and sanitation facilities (12). The population still has an intermediate risk of contracting

diseases such as bacterial diarrhea, hepatitis A, typhoid fever, and malaria (12). This is most

likely a result of the poor water facilities.

These social and demographic factors make the country unattractive for business

investment. Most businesses will most likely put their investments towards other countries

over Afghanistan. Low literacy rates make the available workforce difficult to train. The issues

with disease control will also deter many businesses from investing. Organizations will see any

investment into Afghanistan as a risk.

Political System and Political Forces- Chloe Cardwell

The political and legal systems in Afghanistan are of course unique to their nation, just

like any other. The form of government that Afghanistan has is a Presidential System, in which

the head of government is also the head of state and it leads an executive branch that is

10

Page 13: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

separate from the legislative branch. The current President of Afghanistan is Ashraf Ghani and

the Chief Executive of the Islamic Republic of Afghanistan is Abdullah Abdullah. For better

understanding, the United States has a Presidential System. Afghanistan also operates under

an Islamic Republic. This means that that country is under Islamic laws.

Trade between Afghanistan and other countries is currently at five billion U.S. dollars

per year. They average around seven hundred and seventy million dollars in exports and

around six billion dollars in imports, most recently resulting in a negative trade balance of

around five billion dollars (6). Afghanistan is currently the 158th largest export economy in the

world with a GDP of twenty billion dollars. The top exports consist of grapes and scrap iron, at

14.7% and 10.3%, respectively. The top imports consist of refined petroleum and peat, at

8.37% and 7.09%, respectively (6).

Being one of the most complex economies in the world, the fight against drug trade in

Afghanistan is a huge controversy that affects trade in many areas, both politically and legally.

Poppies are a huge agricultural component of the nation, which has lead to an increase in

opium exports and the battle of legalizing the medical use of morphine from poppies. There is

no real worldwide demand for legal opium, as the current supply of licit opiate raw materials

exceeds world demand (8). Using the Afghan poppies for legal opiates has no realistic or

beneficial reason to be traded; however, it is a constant battle as opium consumes the majority

of Afghanistan’s trade. The Government of Islamic Republic of Afghanistan does however take

action against the drug trade; in fact, they have succeeded in decreasing poppy cultivation in

four major areas of the nation.

11

Page 14: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

Afghanistan, similar to any other nation around the world, faces current challenges that

will ultimately decide its future. The first and perhaps the most significant challenge the Afghan

nation faces is the idea of sustaining political unity (14). The history of political unity in

Afghanistan is almost nonexistent. The inauguration of the nation’s unity government took

place in late 2014, which signified the new and historical democratic transition. Another

challenge that Afghanistan currently faces is achieving their key priorities in a comprehensive

reform agenda (14). The leaders of the nation, Ghani and Abdullah, have agreed to implement

their priorities in a political culture that will best serve their people. Lastly, a large challenge

that the Afghan nation faces today is the promotion of reconciliation and peace (14). The

inauguration of the two newest leaders gives hope to the people of Afghanistan. The

newfound political government of unity in Afghanistan is perhaps the first step in this goal.

Politically, the Afghan government is on the right track to the betterment of their nation

due to their recent inaugurations and reform policies. Of course, there are still battles against

the issues that have existed there and still exist today that prohibit complete success. The

nation’s leaders are hoping and working towards a better nation that will be feasible for the

future of Afghanistan.

Legal and Trade Analysis- Chloe Cardwell

Yet another ongoing battle that the Afghan nation faces is safety. Being a middle-

eastern country, this is to be expected in this day in time. The majority of areas in Afghanistan

remain unsafe because of the consistent risk of kidnapping, hostage situations, military

12

Page 15: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

operations, landmines, political and tribal group violence, fire, suicide bombings, and various

forms of attack (8). Attacks target all areas including the Afghan and U.S. government

installations there, hotels, airports, non-governmental organizations, education centers, and

more. Along with these dangers, extremist/terrorist groups, such as Taliban groups, the Islamic

State of Iraq and the Levant, and various other opposition groups, are at large in the area.

These groups have routine attacks planned and often succeed in their endeavors. To show the

concern surrounding this area, travel to the country by United States government officials and

employees is restricted and requires approval from the Department of State (8).

Legally, trade in and with Afghanistan is complicated and complex, similar to its

economy. In 2014, the World Bank ranked Afghanistan 184 out of 189 in trading across borders

(6). Perhaps this has something to do with the fact that their customs regulations and

procedures are not consistent and are not exactly transparent. All goods imported and

exported into Afghanistan must be classified for Customs in order to determine duty

assessment, statistical information for economic planning, trade negotiations, and the

enforcement of trade laws nationally and globally. However, this advice is not legally binding,

meaning that a country may not receive accurate verbal advice on the tariff classification in

Afghanistan (6).

The Islamic Republic of Afghanistan is a member of several international organizations

such as the Asian Development Bank (ADB), Colombo Plan (CP), Economic Cooperation

Organization (ECO), Food and Agricultural Organization (FAO), Group of 77 (G77), International

Atomic Energy Agency (IAEA), International Bank for Reconstruction and Development (IBRD),

among several others, and is an observer of the World Trade Organization (WTO) (16).

13

Page 16: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

Politically and legally, Afghanistan is a nation under much stress due to the area and

many other forces that make its safety and success a hard task to achieve. However, in hopeful

thought, the two leaders of the Afghan nation will prosper and achieve their goals and meet the

challenges that exist in order to further develop Afghanistan’s economy, both politically and

legally.

Cultural Analysis- Elizabeth Benefield

To describe Afghanistan’s culture Hofstede’s five dimensions is one of the two ways to

describe it. Hofstede’s dimension’s studies how values in the work place relate to the culture.

The first Hofstede dimension is the power distance which is used to measure how unequal

people are in physical and intellectual capabilities. The society of Afghanistan has a large power

distance between the rich and the poor. The second dimension that can be put into use is the

individualism versus collectivism. Afghanistan is more of a collectivism society which means

that they place more value in everyone rather than just one person. Families generally live in

one house and the older members of the family are taken care by their children once they are

grown. The masculinity and femininity dimension has a huge role in the Afghan culture and

those values can also be seen in the work place. Just within the society men have a higher value

and are the head of a household and decision makers. Women are required to stay inside and

be covered from head to toe if they do ever go out. They also cannot be seen or heard by other

people or families. So, the question may be “how is this also reflected in business?” In business

14

Page 17: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

Afghan men, will not interact with a woman at all even if they are an associate. They will not

shake a woman’s hand unless she initiates it first. In public, it is expected that women also dress

conservatively and wear a headscarf so that also is reflected in the workplace. The last

dimension is the long-term versus short-term orientation which means the extent a culture

programs its citizens to accept delayed gratification. Afghanistan seems to be more of a short-f

keep with tradition and stay within each person’s social hierarchy rather than looking towards

the future and staying in the present. Hofstede’s five dimensions is one of the two ways to

describe Afghanistan’s culture and to measure it up against other countries.

The second way to describe Afghanistan’s culture is through Trompenaar’s dimensions.

The first dimension is universalism versus particularism. Afghanistan leans more towards

universalism because of the importance in their laws and values. The second dimension is

individualism versus communitarianism. Whereas the U.S. is more individualism, meaning that

people in the U.S. believe in personal freedom, Afghans are communitarianism, they believe

that the group comes before the individual. Then comes specific versus diffuse, a better way to

describe this dimension is how far people will get involved in a situation. People in Afghanistan

are more on the side of diffuse where their business and personal lives will overlap one

another. The fourth dimension in Trompenaar’s model is neutral versus emotional. Afghanistan

people are emotional and they find ways to express their emotions. Where Afghanistan falls

into the fifth dimension is ascription over achievement. They use titles and show respect to

authority. Sequential time versus synchronous time, in other words punctual or flexible with a

person’s time. Since Afghans are less structured and more fluid when it comes to business

meetings they have more of a synchronous time. The last dimension is internal versus outer

15

Page 18: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

direction. Afghans have an internal direction where they believe they can control their

environment and how they work with teams and organizations. Trompenaar’s dimensions

model is another good way at describing Afghanistan’s culture and people.

The main religion in most of Afghanistan is Islam with a very small minority of other

religions. Afghanistan takes their religion very seriously. They pray five times a day and even if

they are working or have business they take a pause during their day to pray. When going over

there for business it would be better to not conduct business during the month of Ramadan

because the work hours change during this time. They only work six hours a day and during

Ramadan they fast so they cannot eat, drink, smoke, or chew gum. Islam is an important part of

Afghan’s lives so foreigners should be respectful towards their religion. Afghan’s beliefs do not

have a huge impact on business however during Ramadan it could be troublesome when trying

to conduct business and you are only able to be in the country for a day or two.

There are many rules for etiquette in Afghanistan varying from business, to dining, and

to gift giving. Within this section some, but not all the rules of etiquette for each of the points

mentioned previously will be discussed. Business etiquette in Afghanistan is different than it is

when compared to other countries. Before beginning a meeting always shake hands in greeting

along with asking about the health of one’s family, themselves, or their business. In the meeting

with Afghans people will take phone calls or they may come in and out of the room. Overall the

meetings are not very structured and are more fluid. Business in general in Afghanistan is

personal and you need to establish trust with your business counterpart to get to the reason for

the meeting or wanting to work with. Always be mindful of honor and shame when speaking as

those are large components in the culture of Afghanistan and you do not want to accidently

16

Page 19: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

shame the Afghan business partner. Giving a gift is a choice when an invitation to lunch or

dinner has been offered. If a person does choose to give a gift to the host it needs to be

wrapped nicely. So, the gift is not too expensive or ornate it is a good idea to give the host

sweets or fruits. When giving a gift, it needs to be done subtly and not be made a show of. Food

or dining in Afghanistan is incredibly different when compared to the Western World. When

you are eating in a person’s home it is customary to remove your shoes and before eating to

wash one’s hands. Usually everyone will sit cross-legged on cushions sat around a table and if

they extend out their legs it is considered rude. “Food is generally served communally and

everyone will share from the same dish.” (17) When eating, or passing food always use the right

hand. The rule of etiquette in Afghanistan should be closely followed since the country puts so

much weight in honor and shame. To shame a business partner or person in Afghanistan

accidentally could have an extremely negative effect on the rest of your time in the country. So,

to have good relations with the people in the country follow these rules or guidelines and you

should have good relations.

In most countries, there is an underground economy that may be unknown or known,

but not challenged, and Afghanistan has one. Their underground economy is the opium market.

This market is quite massive despite the efforts of the Afghan government and NATO to put a

stop to it and has been around for many years. The impact it has on business is not incredibly

extensive. Although it could have an impact on transportation because some of the profits “go

to funding group that attack both the Afghan and coalition forces.” (11) That within itself could

be dangerous because you would be a foreigner starting up a business and the target of these

group acts are foreigners.

17

Page 20: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

“How does someone begin a business in this country?”, that is a question someone in

business may ask themselves if they are looking to start a company in Afghanistan. The best

way to go about starting a business is to work with a network such as the U.S. Commercial

Services to work with their specialists. Two of the main reasons you would want to work with

the specialist is for the fact that every, or most businesses, want to “target the best market and

meet the best distributors and agents for your products and services.” (13) In Afghanistan, the

best market to target is the richer areas or the growing middle class rather than the poor areas

in the country. Another reason to work with this network specifically is to be better equipped to

overcome the trade barriers or challenges that may come with starting up a business in the

country.

To start a business or to decide to have it in Afghanistan the person needs to recognize

that the country is an incredibly corrupt nation and it is a way of life for the people. The

Transparency International rating gives Afghanistan a score of 11 and is ranked 166 out of 168

countries. The reason that corruption is a way of life for Afghans is because in the Middle East

“political corruption remains a huge challenge” (22). It also does not help the countries rating

when terrorist groups such as Isis and the Taliban are prevalent in the Middle East. Corruption

is a way of life in Afghanistan because of political corruption that goes unchallenged.

The businessman or woman desiring to take their business to Afghanistan needs to

know how dangerous this country is and should do extensive research. The country is still a

highly dangerous place for living and traveling and the reasons are extensive. There are still

military operations, constant “armed rivalry between political and tribal groups, and direct and

indirect fire.” (8) For people wanting to move to this country it would be highly unadvised due

18

Page 21: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

to not only the previous two reasons, but also the fact that the Taliban is still prominent and

have been using explosive devices to target citizens of other countries. The list for way this

country is still dangerous could go on, but to shorten it those are three main reasons as to why

Afghanistan is a highly dangerous place for living.

19

Page 22: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

References

(1) "Afghanistan - Construction Materials Afghanistan - Construction Materials." Afghanistan -

Construction Materials. U.S. Department of Commerce, 17 Apr. 2016. Web. 3 Nov.

2016.<https://www.export.gov/article?id=Afghanistan-construction-materials>.

(2) "Afghanistan Economic Growth." USAID. N.p., 2016. Web. 19 Nov. 2016.

(3) "Afghanistan - Executive Summary Afghanistan - Executive Summary." Afghanistan -

Executive Summary. State Department's Office of Investment Affairs, 2 Nov. 2016. Web.

12 Nov. 2016. <https://www.export.gov/article?id=Afghanistan-executive-summary>.

(4) "Afghanistan - Meat Processing Afghanistan - Meat Processing." Afghanistan - Meat

Processing. U.S. Department of Commerce, 17 Apr. 2016. Web. 10 Nov. 2016.

<https://www.export.gov/article?id=Afghanistan-meat-processing>.

(5) "Afghanistan - Non-Traditional Products Afghanistan - Non-Traditional Products."

Afghanistan - Non-Traditional Products. U.S. Department of Commerce, 17 Apr. 2016.

Web. 10 Nov. 2016. <https://www.export.gov/article?id=Afghanistan-non-traditional-

products>.

(6) "Afghanistan." OEC - Afghanistan (AFG) Exports, Imports, and Trade Partners. N.p., n.d.

Web. 28 Nov. 2016.

20

Page 23: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

(7) "Afghanistan - Topography." Topography - Afghanistan - Average, Growth, Crops. N.p., n.d.

Web. 23 Nov. 2016.

<http://www.nationsencyclopedia.com/Asia-and-Oceania/Afghanistan-

TOPOGRAPHY.html>.

(8) "Afghanistan Travel Warning." U.S. Department of State. U.S. Department of State, 05 Oct.

2016. Web. 22 Nov. 2016.

(9) "Afghanistan." The World Bank. N.p., 2016. Web. 20 Nov. 2016.

(10) Boot, Max. "Max Boot: Afghans Don't Hate America." WSJ. Wsj.com, 28 Feb. 2012. Web. 22

Nov. 2016.

<http://www.wsj.com/articles/SB10001424052970204653604577249363870929358>.

(11) "Economies of Pakistan and Afghanistan." DebateAsia - Economies of Pakistan and

Afghanistan . N.p., n.d. Web. 23 Nov. 2016.

(12) "Human Development Reports." | Human Development Reports. N.p., n.d. Web. 23 Nov.

2016. <http://hdr.undp.org/en/countries/profiles/AFG>.

21

Page 24: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

(13) "Kabul, Afghanistan - Embassy of the United States." Doing Business in Afghanistan | Kabul,

Afghanistan - Embassy of the United States. N.p., n.d. Web. 22 Nov. 2016.

(14) Khalilzad, Zalmay, Franz J. Marty, Nicola Degli Esposti, and Michael Horton. "A New Start

for Afghanistan: 3 Massive Challenges That Will Decide Its Future." The National

Interest. N.p., n.d. Web. 28 Nov. 2016.

(15) M, Siofra. "How Low Would You Go? The Best and Worst Minimum Wages." TheRichest.

N.p., 29 Nov. 2013. Web. 20 Nov. 2016.

(16) "NGOs." The Afghanistan Analyst. N.p., 2013. Web. 28 Nov. 2016.

(17) Pike, John. "Military." Etiquettes of Afghan Culture. N.p., 17 Aug. 2012. Web. 22 Nov. 2016.

(18) Rahmani, Ahmad. "Political Leadership in Afghanistan." Rand Corporation. N.p., n.d. Web.

28 Nov. 2016.

(19) Sadr, Omar. "Understanding War in Afghanistan: Politics, Culture and Social History." Fair

Observer. N.p., 2014. Web. 20 Nov. 2016.

(20) Winebaum, Marvin G. "Afghanistan." JSU Database Login. Brittanica Academic, n.d. Web. 2

Nov. 2016. <http://academic.eb.com.lib-proxy.jsu.edu/levels/collegiate/article/

22

Page 25: Executive Summary -Abigail Jaskowski€¦  · Web viewSocial and Demographic Factors- Madeline Paris10. Political System and Political Forces- Chloe Cardwell11. Legal and Trade Analysis-

106010#21414.toc>.

(21) "The World Factbook: AFGHANISTAN." Central Intelligence Agency. Central Intelligence

Agency, n.d. Web. 15 Nov. 2016.

<https://www.cia.gov/library/publications/resources/the-world-factbook/geos/

af.html>.

(22) Zughayar, Ghada. "Middle East and North Africa: Why Corruption Is Fuelling Regional

Insecurity." Space for Transparency. N.p., 27 Jan. 2016. Web. 22 Nov. 2016.

23