Haiti after the earthquake

Haiti after the earthquake

Haiti is the country with the highest poverty rate in the Americas, with more than 80 percent of its population living below the poverty level. The natural disasters of 2010 — the earthquake of January 12, 2010, followed by Hurricane Tomas on November 5, 2010 — had a devastating effect on the Haitian economy. Before 2010, Haiti had the lowest gross domestic product (GDP) per capita and one of the most uneven distributions of income. Per capita income was around one tenth that of neighboring countries in the Caribbean region. With a GDP of about $11 billion during the years immediately prior to the earthquake ($11.18 billion in 2010, $12.15 billion in 2009), it is estimated that the catastrophic events of 2010 were responsible for about half of the decline for 2011.

Haiti’s GDP comes from three main sectors: agriculture, industry and services. Agriculture represents 28% of GDP. Although a large part of the population works in small-scale subsistence agriculture, export agriculture represents the most important labor sector in the country and provides about 66% of jobs. The most important agricultural export products are coffee, mangoes, cocoa and sugar. Industry, meanwhile, represents 20% of GDP and provides about 9% of the jobs. The most important industries are beverages, butter, cement, cooking oil, flour, refined sugar, soap and needlework. With Haiti’s entrance into the common market of the Caribbean Basin Initiative (CBI) through the Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE) of 2006 and HOPE II of 2008, the industry of assembling goods in a free trade zone has become an important industrial segment. In 2008, this industry was responsible for two thirds of Haiti’s exports to the United States. Finally, the service sector (mainly tourism) is the only one that has shown signs of growth. It represents 52% of GDP and provides jobs to 10% of the labor force.

Since the fall of the Duvalier dictatorship in 1986, Haiti’s economic history has been characterized by two singularities: an economy drowning in reparations and foreign debt since its very beginnings, which directly affects social welfare systems and has repercussions on poverty, and an absence of private initiative and foreign investment resulting from a policy of “isolation” that has been applied since the Haitian Revolution (and, according to many analysts, is still applied more discretely and surreptitiously) that has had the effect of expanding the numbers of unemployed and underemployed. In 2005, Haiti had a labor force estimated 3.6 million workers and unemployment of approximately 50% (it reached its historic high of 70% in 1999). This number is even higher if underemployment is considered, and it is estimated that the level of unemployment/underemployment in Haiti is 70 percent of the population. Remittances from abroad (mainly from the United States) are an important source of income for many Haitians.

Meanwhile, the problem of reparations and foreign debt has been another characteristic of the Haitian economy. In the first years after the Revolution, Haiti was obligated to pay France 150 million francs in reparations. In later years, Haiti tried various modernization projects by borrowing from international development agencies and the payments on these debts have drowned the government’s finances. Haiti’s foreign debt immediately after the earthquake rose to approximately $1 billion and there have been many calls in the international community to cancel the rest of this debt as a form of humanitarian aid to the country. Some groups have proposed, since the 2010 earthquake, that it is also a good time for France to return to Haiti the money it demanded in reparations, arguing that it was not a legitimate debt to begin with.

 

 

Author: Luis Galanes
Published: May 02, 2012.

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