Impact of Unemployment on Economic Growth of Afghanistan 2003 to 2019
Afghanistan is a country that has plentiful natural resources with a strategic location that is connecting central and south Asian countries, besides receiving more than USD 75 billion in aids from the International community during 2003-2019, Afghanistan is still suffering from a 75% of the poverty rate and 37% of unemployment rate which is the highest poverty and unemployment rate in the region. Unemployment is considered a grim problem in the world and even developing countries are also suffering from increasing unemployment rate and Afghanistan is considered as the least developing country that has a high unemployment rate, thus we have investigated unemployment in Afghanistan for the period of 2003 to 2019 quarterly data. The analysis is executed with the help of the economic model of Okun’s law that has investigated the relationship between the unemployment rate and economic growth and statistical models of the Auto Regressive Distributed Lag Model (ARDL) bound test for the mentioned period.
The result of the analysis shows that there is no significant and long-run relationship between economic growth and unemployment rate from 2003 to 2019 in Afghanistan due to many reasons such as informal economy, a colossal amount of foreign aids, corruption, war, and drug trafficking.
Keywords - Unemployment, Economic Growth, Okun’s Law, Autoregressive Distributed Lag Model (ARDL) Bound Test, Security, Drug addiction, Taliban, Under Unemployment.