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P OLICY R ESEARCH W ORKING P APER 4545 Responding to Afghanistan’s Opium Economy Challenge: Lessons and Policy Implications from a Development Perspective William A. Byrd The World Bank South Asia Region Poverty Reduction and Economic Management Finance and Private Sector Development Department March 2008 WPS4545 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Produced by the Research Support Team Abstract The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. P OLICY R ESEARCH W ORKING P APER 4545 Opium, Afghanistan’s leading economic activity, lies at the heart of the challenges the country faces in state building, governance, security, and development. With their narrow law enforcement focus and limited recognition of development, security, and political implications, current global counter-narcotics polices impose a heavy burden on Afghanistan. This paper first provides a summary overview of Afghanistan’s opium economy and the factors determining rural households’ decisions on cultivating opium poppy. It then discusses the dynamic evolution of the Afghan drug industry in recent years, in particular its consolidation around fewer, powerful, politically-connected actors and the associated This paper—a product of the Poverty Reduction and Economic Management, Finance and Private Sector Development Department of the World Bank's South Asia Region—is part of a larger effort in the department to conduct policy analysis of Afghanistan's opium economy from a development and state-building perspective. Policy Research Working Papers are also posted on the Web at . The author may be contacted at [email protected] compromising of parts of some government agencies by drug industry interests. The paper reviews the experience with different counter-narcotics interventions, analyzes some proposals not yet tried in Afghanistan, and draws lessons and policy implications. Unfortunately there are no “silver bullets”—easy, quick, or one-dimensional solutions, and a longer-term horizon along with sustained commitment and resources will be required in order to phase out the opium economy over time. The paper concludes by putting forward some broad principles and approaches of a “smart strategy” against drugs in Afghanistan.
Responding to Afghanistan’s Opium Economy Challenge:

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