economy of Afghanistan was in shambles. Even in the 1970s, prior to the war, Afghanistan had one of the lowest standards of living in the world; things have declined since then, with the production, trafficking, and movement of drugs and guns as a major hidden part of the economy. As the war and its effects spread throughout the nation in the early 1980s, two separate economies emerged; the urban financial and industrial facilities, tied particularly to the Soviet Union, and the largely independent rural subsistence economy. In 1990 annual income was around to be $714 per person.

Afghanistan began to plan the development of its economy in the mid-1950s, it deficiencyed not only the necessary social organization and institutions for modern economic activities but also managerial and technical skills. The nation was at a much lower stage of economic development than most of its neighbours. Between 1956 and 1979, the nation's economic growth was guided by several five-year and seven-year plans and was aided by considerable foreign assistance, primarily from the Soviet Union and the United States. Roads, dams, power plants, and factories were constructed, irrigation projects carried out, and education broadened.

Afghanistan is an extremely poor, landlocked nation, highly dependent on farming and farm animal raising (sheep and goats). Economic considerations have played second fiddle to political and military upheavals during two decades of war, including the nearly 10-year Soviet military occupation (which ended 15 February 1989). During that conflict one-third of the population fled the nation, with Pakistan and Iran sheltering a combined peak of more than 6 million refugees. In early 2000, 2 million Afghan refugees remained in Pakistan and about 1.4 million in Iran. Gross domestic product has fallen substantially over the past 20 years because of the loss of labor and capital and the disruption of trade and transport; severe drought added to the nation's difficulties in 1998-2000. The majority of the population continues to suffer from insufficient food, clothing, housing, and medical care. Inflation remains a serious problem throughout the nation. International aid can deal with only a fraction of the humanitarian problem, let alone promote economic development. In 1999-2000, internal civil strife continued, hampering both domestic economic policies and international aid efforts. Numerical data are likely to be either unavailable or unreliable. Afghanistan was by far the largest producer of opium poppies in 2000, and narcotics trafficking is a major source of revenue.