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India's engagement with Afghanistan readily became multi-dimensional after the defeat of the Taliban and the installation of an Interim Authority in 2001. This was reflected in an immediate upgradation of Indian representation in Afghanistan from Liaison Office to full-fledged Embassy in 2002. India actively participated in the Bonn Conference and was instrumental in the emergence of post-Taliban governing and political authority in Afghanistan. Since then, India's main focus has been to support the Afghan government and the political process in the country as mandated under the Bonn agreement of 2001. It has continued to pursue a policy of high-level engagement with Afghanistan through extensive and wide-ranging humanitarian, financial, and project assistance, and participation in international efforts aimed at political reconciliation and economic rebuilding of Afghanistan.

This study investigates the trade potential of Afghanistan with the South Asian Association for Regional Cooperation (SAARC) and European Union (EU) by employing an augmented gravity model approach. The model used the latest Economic and Social Commission for Asia and the Pacific (ESCAP) dataset with the base year 2016, covering data from 2015 to 2021. The results of the study satiate that out of the chosen 15 countries of the EU, the magnitude of Afghanistan's trade potential is high with three EU countries (Germany, France and Spain), whereas in the case of SAARC, Afghanistan's trade potential is the highest with Pakistan, followed by India and Bangladesh. Results show that simple average tariff imposition and partner countries' GDP positively impact Afghanistan's trade value.

In contrast, simple average tariff imposition bilaterally harms the trade volume of the reporting country. Statistically, a 1% tariff rate change decreases Afghanistan's total trade by 0.3%. Moreover, a 1% increase in the GDP of the partner countries will increase Afghanistan's total trade by 0.5%. Furthermore, common language, landlocked and distance significantly impact Afghanistan's total trade. The results suggest that Afghanistan needs to explore the ways and means to improve its trade relations with the countries further and improve its market share. The study proposed that Afghanistan should use trade as an economic development tool to flourish in the region and capture the markets to realise its maximum trade potential. This research recommends that South Asian and EU countries revise the tariff rates and other non-tariff barriers to boost trade and connectivity for a better trade future.

Afghanistan has experienced capital flight, which has long perplexed policymakers and planners. There have been widespread concerns about capital's ‘paradoxical’ character, which jeopardises national welfare. In this regard, this study envisages examining the nature and prevalence of reverse capital flight in Afghanistan by employing two methods viz direct approach (Cuddington's Model) and indirect approach (World Bank approach and Morgan approach). The findings highlight four main reasons for reverse capital. These include facilitating the whitening of black money (money laundering) which has been previously illegally flown out of the country; second, it allows import tax evasion and the realisation of unnecessary export rebates and refunds; third, it facilitates the avoidance and incidence of Non-Tariff Measures (NTMs) on imported goods; and finally, it allows for the concealment of investment in the underground economy. The study recommends maintaining a thorough record of illegal cash flows in Afghanistan since the nature of trade in Afghanistan is difficult owing to the simultaneous flow of illicit capital. Furthermore, the unrecorded private investments must be adjusted for illegal capital flows resulting from trade mis-invoicing, thus crucial for policy enunciation.

The Corona Pandemic, also known as the COVID-19, which gripped the entire world from the beginning of 2020, has been hitting Afghanistan, which has already been facing socio-economic, health, educational, and safety problems starting in the pre-pandemic period, very hard. The number of people who were contracted by the virus and perished in this regard reached biblical proportions. Due to the insufficiency in the practice of family physician and in the coverage of social security in addition to the economic problems, all of which had been present in the pre-pandemic period, many Afghani citizens are having challenges in accessing main foodstuff, medicine and drinkable water. On top of that, the state offered no practice in terms of supporting its citizens financially even during the pandemic. In this study, in line with the information and reports, provided by the Afghani State and the international institutions, the experiences that Afghanistan has been living through this pandemic as well as the economic and, therefore, social events that the country shall face in the upcoming period is analysed. Furthermore, in this work, the actions and the impact of the foreign imperialists that invaded the country in addition to the state and the terrorist organisations, which pose a great threat against the security of this nation, are discussed.

The benefits of global trade are primarily attributed to reducing trade distortions between trading partners. The anticipated promise of a progressive diminution in tariffs throughout the globe was, regrettably, steadily superseded by non-tariff measures (NTMs). However, the impact of these NTMs is only sometimes evident since it occurs in various disguises. NTMs significantly influence trade in the SAARC, mandating prompt attention. The question is how much internal trade will expand if NTMs are repealed. Based on statistics from 2015 to 2020, the study endeavours to quantify the impact of NTMs on Afghanistan's trade volume within the SAARC region, primarily targeting four export destinations (Bangladesh, India, Pakistan and Sri Lanka). Using trade freedom scores as a proxy for trade distortions, it has been determined that Afghanistan's magnitude of export earnings is significantly lower due to NTMs imposed by its importing trading partners. According to the findings, a 1% rise in tariffs and NTMs applied by importing countries diminishes Afghanistan's exports by 1.23%.

In contrast, the impact of tariffs alone lowers Afghanistan's exports by 1.13%. The incidence of NTMs also devoid actual Afghanistan exports by US$ 5.70 million, equal to a 0.029% loss of Afghanistan's GDP. The calculations also reveal that lowering or eliminating non-tariff barriers has diverse trade growth effects in different trade groupings. The study recommends a serious NTM-oriented trade policy dialogue that is liberal and guarantees regional integration, thereby promoting and ensuring the future of Afghanistan's economic laurels and stability.

For over three decades, Afghanistan has been a battleground in which many of the states of the wider neighbourhood have been involved. The importance of fostering a concerted effort for Afghan peace and stability is widely agreed upon, yet such a process remains difficult to bring about. Some analysts emphasize states and their security relationships, seeing Afghanistan as an ‘insulator’ caught between different regional state systems, each with a strong dynamic of its own. Other analysts emphasize various transnational networks and see Afghanistan as the ‘core’ of a larger conflict formation. This chapter takes as its starting point the former perspective, which has been codified by Barry Buzan and Ole Wæver (2003) as the regional security complex (RSC) approach. The chapter examines the security dynamics of each of the regions surrounding Afghanistan – South Asia, the Persian Gulf and South Asia – adopting a comparative and historical perspective, with an emphasis on the period since the late 1970s. It concludes that each of Afghanistan's three surrounding regions is characterized by deep security concerns of its own. These concerns nonetheless inform the engagement of neighbouring countries in Afghanistan, which then comes to reflect conflicts and cleavages specific to the respective regions. One central implication is that a more promising strategy for Afghanistan might be to seek a unilateral non-offensive or neutral status, rather than full security integration with its neighbours. Although such a strategy would necessitate the creation of a forum for Afghanistan's neighbours to foster understanding for the Afghan position, it represents a dramatic departure from mainstream policy proposals with their emphasis on an integrated regional approach.

Using different trade indices spanning 2018–2021, this chapter investigates Afghanistan's current patterns, prospects and barriers for intra- and inter-regional trade perspectives, emphasising the different pathways by which Afghanistan trades with Central Asian economies. The empirical findings demonstrate that the anticipated significance of trade between Afghanistan and Central Asia is double compared to the existing levels of trade. Furthermore, the analysis encompasses the categorisation of sectors based on the intensity of usage of production factors like resource, labour and technology. The analysis further elaborates on Afghanistan's trade potential with Central Asia and vice versa by highlighting the comparative advantage, diversification, complementarity and similarity in trade. The findings suggest that larger economies are rated higher than smaller ones as size and development level are essential factors in regional trade development. The most effective channels of regional trade development are price competitiveness measures, intra-industry trade and trade complementarities. These findings have a substantial influence on the development of different trade policy efforts to stimulate investment and trade within and among the two regions.

The trading expenses encountered domestically and across borders have a detrimental influence on global trade. Higher trade costs hamper trade and limit the benefits of trade liberalisation. The current research applies Novy's micro-founded trade cost measure (2013) to estimate global trade costs connected with Afghanistan, along with the factors that influence trade costs. Based on the investigation, trade in agriculture costs is significantly higher compared to the non-agricultural. As a consequence, focusing on agricultural trade facilitation would be advantageous.

Furthermore, enhancing and expediting trade facilities in trading areas are top priorities for government intervention to reduce trade costs. Focusing on free trade agreements and better shipment communication with trade partners increases transportation routes efficiently, cutting time and other expenses. The study proposes that the World Trade Organization's trade facilitation agreement be effectively implemented, administrative burdens at entry points minimised, non-tariff barriers (NTBs) be simplified and harmonised and soft infrastructures be established utilising current technologies.

The increased participation of economies in regional and bilateral free trade agreements (FTAs) has resulted in welfare effects. This chapter attempts to determine the welfare implications of preferential reductions in tariffs and free-trade zones on Afghan imports by adopting the Magee (2016) framework. This approach separates the consequences of tariff hikes triggered by FTAs from the general equilibrium effects (GEEs) caused by unknown variables impacting the country's imports (historical links, shared language and culture, landlockedness, etc.). This method evaluates whether preferential tariff reductions favouring partner countries would benefit or harm member countries. The results indicate that the magnitude of the effects of trade creation (TC) is significantly higher than those of trade diversion. TC resulting from GEEs unexpectedly surpasses TC resulting from tariff preferences extended to member nations. Afghanistan's FTAs are not harmful but enhance living conditions. This chapter recognises South Asian Free Trade Area’s (SAFTA's) potential for trade expansion by focusing on commitment to regional integration and increasing liberalisation by implementing a more easily upgraded tariff framework and trade facilitation system. The findings are relevant since World Trade Organisation (WTO) members are often sceptical about regional trade agreements (RTAs) or Bilateral Free Trade Agreements (BFTAs) as agents harming well-being.