Economics

Economic Development and Reform
19 July 2010

 

It is always slightly amusing and gratifying to have respected academics give a name to stuff you have been doing for the past 30 years and start to publish papers on it – better still to find that they have developed a web site dedicated to it.    Apparently the work Upper Quartile has been doing in all the fragile states and transitional economies we have worked in is now called Expeditionary Economics.

 

Perhaps a more logical explanation is that with all the attention devoted to Iraq and Afghanistan over the past 8 years, academics were bound to start looking at the issues and wrapping new theories and labels around them.

 

Expeditionary economics is (apparently) a new area of economics focused on rebuilding economies in post-conflict nations, including Iraq and Afghanistan. The concept was articulated by Carl Schramm from the Kauffman Foundation in June 2010.   It is based on the principle that the most effective way to stimulate economic growth in conflict-affected areas is to create businesses that can generate rapid growth in revenue and employment.    

 

This is (in our view) the most effective way to build growth in any economic area ............. just infinitely more difficult in countries where people are killing each other.   The difficult bit is unpicking the illegitimate economic winners in a conflict and replacing them with a legitimate economy – because there are very vibrant effective economies in any war zone – without aggravating the situation.  

 

Kauffman makes the point that the U.S. military has the main responsibility to leave Afghanistan in a stable economic state. Now we have worked in over eight conflict countries and the military (of any country) just do not do private-sector.   They certainly do not do the sort of work required in transitional, predominantly rural economies like Afghanistan.    Kauffman is correct that it is critical that a strategy is developed for achieving post-conflict growth. He is wrong that it is down to the military.

 

Kauffman makes the point that a central issue surrounding expeditionary economics is whether the military and civilian agencies invent the requisite commercial expertise itself to do this, rather than outsourcing the task to private-sector contractors.    No they can’t and no they shouldn’t.   There is incredible entrepreneurial expertise in places like Afghanistan – the system has just got to get better at using it in the right places and at the right time.

 

As an example, the Afghan opium trade has international supply chains that would be the envy of a multi-national.   Anyone who can keep a billion $ vertically integrated supply chain going is good – very good.    If you can keep it working when there are 100,000 well equipped soldiers trying to stop you, you are world class.  

 

None of the NATO coalition members in Afghanistan have yet managed to build any integration with the private sector – international or domestic -  in Afghanistan.  We ship in our own food, water and consumables; we produce our own power, we have Subway, Pizza Hut and Starbucks on-site and live in forts – the World Bank estimate that less than 4% of what is spent in Afghanistan is spent on the local population.

 

It is one of the most fertile countries in the region with a world class supply chain – why are we using opaque Swiss based companies to ship in the millions of tons of food that we eat in the country?  

 

The Foundation of Entrepreneurship has a web site and provides background materials about expeditionary economics, including papers and videos stemming from the first conference ever held on the topic, "Entrepreneurship and Expeditionary Economics" which was held in partnership with the Command and General Staff College Foundation.

 

Less papers and sponsorship and more freeing-up of local commercial skills would be a better start – and we could start with what is eaten in Afghanistan.

 

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