Does the community-based development program contribute to the economic welfare of rural households? : evidence from a randomized experiment in Afghanistan

This study evaluates the impacts of a community-based development program on the economic welfare of rural households in Afghanistan. Using a randomized experiment data collected by National Solidarity Program (NSP), this paper uses Ordinary Least Square Method (OLS) to eliminate the selection bias. The results show that the program decreased the economic welfare of rural households in the short-term due to the small amount of cash inflow and high expectations of the rural households. However, the program increased the economic welfare of rural households in the medium-term through the completion of infrastructure and irrigation projects. In particular, the program has increased household income, consumption, and agriculture productivity of the treatment group on average by 20, 11, and 19 percent respectively. Moreover, the study concluded that channeling resources under the community-based development program approach was an effective way to target the rural households in medium-term. Future research is required to capture the political, institutional, and project management problems that could influence the impact of the community-based program.