Haiti’s Opportunity to Make Economic Strides

Article By Matthea Brandenburg

Rubble, tent cities, filthy water and food shortages still plague Haiti more than a year after the 2010 earthquake.  Haiti’s 2010 GDP real growth rate measured in at -5.1%, ranked 213th in the world (CIA World Factbook).  This growth rate stands above only three countries/locations recognized by the CIA. 

As every post-disaster situation seems to allow, there is now an opportunity for renewal and time to discuss changes in reconstruction strategy.  Changes in the economic sector could most definitely aid in the transformation of Haiti back to its pre-earthquake state, and in fact, allow it to become a more prosperous nation. 

[Photo courtesy of International Telescope]

Many economic changes have been proposed, but perhaps it is one that most would brush over, or even hesitate to suggest, that could yield incredibly positive economic change.  Michael Fairbanks, co-founder of the SEVEN Fund, which encourages enterprise solutions to poverty, believes increased co-operation between Haiti and its neighbor, the Dominican Republic, could greatly improve the economic state of both nations.  In his Fox News article, “The Only Thing That Can Help Haiti Now,” he says, “In fact, there is no solution that builds long term prosperity in Haiti that does not focus on the relationship between the political and commercial elites of Haiti and the Dominican Republic” (http://www.foxnews.com/opinion/2011/01/12/thing-help-haiti/?cmpid=cmty_email_Gigya_The_Only_Thing_That_Can_Help_Haiti_Now). 

Despite the vast amount of international aid, both financial and humanitarian, that has been poured into Haiti, it has not been able to recover from the recent disaster, let alone maintain a day-to-day situation which allows for the basic human needs of the majority of the population to be met.  Through this proposed Haiti/Dominican Republic co-operation, the Dominican Republic’s contribution to Haiti would not be provided through financial aid, but rather through business relationships.  Partnering with the Dominican Republic in industries, such as the textile industry, beginning with small scale operations and moving into larger ones, is a good start, which would hopefully immerse the nations more deeply into the global economy. 

Given Haiti’s current economic situation, operating on its own, without a mutual business understanding, has proven difficult.  According to Pierre Marie Boisson, a Harvard-trained, Haitian Bank Director, “It’s logical to have a single island economy; but under certain circumstances, the complete integration or one island economy scenario is unlikely, politically” (“The Only Thing That Can Help Haiti Now”). 

The Dominican Republic has proven effective in the free trade spectrum, running 56 successful free trade zones in the country, most of them private (“The Only Thing That Can Help Haiti Now”).  Macela Escobari, Executive Director of Harvard’s Center for International Development, believes Haiti and the Dominican Republic could create incentives to attract Dominican Entrepreneurs to create microcosms of efficiency and security in Haiti (“The Only Thing That Can Help Haiti Now”).  According to Fairbanks, “The D.R. has shed almost 100,000 textile jobs since 2000 because labor is too expensive compared to China.”  Escobari notes the considerable opportunity this creates for Haiti.  She says, “Haiti has lower salaries than China and under the HOPE Act, they can source fabrics from anywhere in the world (at half price of what the D.R. can), and still export it to the U.S. with low tariffs." 

Recognizing this comparative advantage could propel Haiti’s textile industry, as well as strengthen ties with the D.R.  In Turkey, for example, its globally recognized traditional textiles and clothing sectors account for one-third of industrial employment (CIA World Factbook).  If Haiti and the D.R. joined forces to create textiles, hopefully their joint industry would rise to a globally competitive level as well.  According to Fairbanks, “The logic of co-production, where textile plants in the Dominican Republic with D.R.-CAFTA benefits, combined with sewing operations in Haiti with preferential market access under HOPE and HELP legislation, could achieve world-class efficiencies.”

Of course, Haiti would only benefit if this business relationship was conducted fairly.  “All Haitians benefit if co-production, special zones and the inevitability of free trade and integration encourages Haiti to put its house in order and adopt an effective investment-led growth agenda,” says Fairbanks. 

Through one such partnership, growth in Haiti’s textile industry would have potential to flourish and more entrepreneurial spirit in Haiti would likely emerge.  Up to this day, Haiti has been largely dependent on imported goods.   In 2010, Haiti imported $2.727 billion worth of goods, compared with $530.2 million in exports (CIA World Factbook).  At least within the textile industry, Haiti could become less dependent on foreign goods, and hopefully through further thinking and planning, Haiti could identify other industries in which it has a comparative advantage over other nations.  By entering into a business relationship with the D.R., textile production would be conducted much more efficiently, and with a win-win exchange of resources, both countries would experience greater economic diversity. 

The recent disaster has further highlighted the need for Haiti to utilize different economic opportunities.  Changing economic strategies does require taking risks, but taking risks can sometimes yield great rewards.  In the long run, if Haiti enters into a partnership with the D.R., hopefully it can experience a sense of economic pride, one that is not just temporary, but long lasting.  

The rubble, tent cities, unclean water, and lack of resources is not a sentence, it is only the current situation.  Through entrepreneurship, collaboration, and recognition of comparative advantages, Haiti can move one step closer to freeing itself from these afflictions and in the words of Bishop John Rucyahana of Rwanda, “move from existing to living.”

Jul 212011
blog comments powered by Disqus