Economy of Haiti
Encyclopedia
Haiti
is the poorest country in the Americas
. Two-thirds of all Haitians depend on the agriculture
sector, mainly small-scale subsistence farming, and remain vulnerable to damage from frequent natural disaster
s, exacerbated by the country's widespread deforestation
. A macroeconomic program developed in 2005 with the help of the International Monetary Fund
helped the economy grow 1.8% in 2006, the highest growth rate since 1999. Haiti suffers from higher inflation
than similar low-income countries, a lack of investment (increasing however since the recent presidential seating), and a severe trade deficit. In 2005, Haiti paid its arrears
to the World Bank
, paving the way for reengagement with the Bank. The government relies on formal international economic assistance for fiscal sustainability. In 2006, Haiti held a successful donors conference in which the total aid pledged exceeded Haiti's request. Remittances are the primary source of foreign exchange
, equaling nearly a quarter of GDP.
, in several cases calling on the French government to repay it (the French government has never been willing to repay it, though there was a hoax following the 2010 Haiti Earthquake
involving a fake website purporting to offer reparation payment on behalf of the French Government).
Since the demise of the Duvalier
dictatorship in 1986, international economists have urged Haiti
to reform and modernize its economy. Under President René Préval
(President from 1996 to 2001 and from 2006 onwards), the country's economic agenda included trade and tariff liberalization, measures to control government expenditure and increase tax revenues, civil-service downsizing, financial-sector reform, and the modernization of state-owned enterprises through their sale to private investors, the provision of private sector management contracts, or joint public-private investment. Structural adjustment agreements with the International Monetary Fund
, World Bank
, Inter-American Development Bank
, and other international financial institutions aiming at creating necessary conditions for private sector growth, have proved only partly successful.
In the aftermath of the 1994 restoration of constitutional governance, Haitian officials have indicated their commitment to economic reform through the implementation of sound fiscal and monetary policies and the enactment of legislation mandating the modernization of state-owned enterprises. A council to guide the modernization program (CMEP) was established and a timetable was drawn up to modernize nine key parastatals. Although the state-owned flour-mill and cement plants have been transferred to private owners, progress on the other seven parastatals has stalled. The modernization of Haiti's state-enterprises remains a controversial political issue in Haiti.
External aid is essential to the future economic development
of Haiti, the least-developed country in the Americas
. Comparative social and economic indicators show Haiti falling behind other low-income developing countries (particularly in the Western hemisphere) since the 1980s. Haiti's economic stagnation results from earlier inappropriate economic policies, political instability, a shortage of good arable land, environmental deterioration, continued use of traditional technologies, under-capitalization and lack of public investment in human resources, migration of large portions of the skilled population, and a weak national savings rate.
Haiti continues to suffer the consequences of the 1991 coup
. The irresponsible economic and financial policies of de facto authorities greatly accelerated Haiti's economic decline. Following the coup, the United States adopted mandatory sanctions, and the OAS
instituted voluntary sanctions aimed at restoring constitutional government
. International sanctions culminated in the May 1994 United Nations
embargo of all goods entering Haiti except humanitarian supplies, such as food and medicine. The assembly sector, heavily dependent on U.S. markets for its products, employed nearly 80,000 workers in the mid-1980s. During the embargo, employment fell from 33,000 workers in 1991 to 400 in October 1994. Private, domestic and foreign investment has been slow to return to Haiti. Since the return of constitutional rule, assembly sector employment has gradually recovered with over 20,000 now employed, but further growth has been stalled by investor concerns over safety and supply reliability.
If the political situation stabilizes, high crime levels wane, and new investment increases, tourism could take its place next to export-oriented manufacturing (the assembly sector) as a potential source of foreign exchange. , remittances from abroad constitute a significant source of financial support for many Haitian households.
The Haitian Ministry of Economy and Finance designed the Haiti economic reforms of 1996
to rebuild the economy of Haiti after significant downturns suffered in the previous years. The primary reforms centered around the Emergency Economic Recovery Plan (EERP) and were followed by budget
reforms.
Haiti's real GDP
growth turned negative in FY 2001 after six years of growth. Real GDP fell by 1.1% in FY 2001 and 0.9% in FY 2002. Macroeconomic stability was adversely affected by political uncertainty, the collapse of informal bank
ing cooperatives, high budget deficits, low investment, and reduced international capital flows, including suspension of IFI lending as Haiti fell into arrears with the Inter-American Development Bank (IDB) and World Bank.
Haiti's economy stabilized in 2003. Although FY 2003 began with the rapid decline of the gourde due to rumors that U.S. dollar deposit accounts would be nationalized and due to the withdrawal of fuel subsidies, the government successfully stabilized the gourde as it took the politically difficult decisions to float fuel prices freely according to world market prices and to raise interest rates. Government agreement with the International Monetary Fund
(IMF) on a staff monitored program (SMP), followed by its payment of its $32 million arrears to the IDB in July, paved the way for renewed IDB lending. The IDB disbursed $35 million of a $50 million policy-based loan in July and began disbursing four previously approved project loans totaling $146 million. The IDB, IMF, and World Bank
also discussed new lending with the government. Much of this would be contingent on government adherence to fiscal and monetary targets and policy reforms, such as those begun under the SMP, and Haiti's payment of its World Bank arrears ($30 million at 9/30/03).
The IMF estimated that real GDP was flat in FY 2003 and projected 1% real GDP growth for FY 2004. However, GDP per capita— amounting to $425 in FY 2002 — will continue to decline as population growth is estimated at 1.3% p.a. While implementation of governance reforms and peaceful resolution of the political stalemate are key to long-term growth, external support remains critical in avoiding economic collapse. The major element is foreign remittances, reported as $931 million in 2002, primarily from the U.S. Foreign assistance, meanwhile, was $130 million in FY 2002. Overall foreign assistance levels have declined since FY 1995, the year elected government was restored to power under a UN mandate, when the international community
provided over $600 million in aid.
A legal minimum wage of 36 gourdes a day (about U.S. $1.80) was set in 1995, and applies to most workers in the formal sector. It was later raised to 70 gourdes per day. Actually this minimum is 200 gourdes a day(about U.S. $4.80).
All Latin American and Caribbean countries except Cuba and Venezuela enjoyed much more economic freedom
than Haiti on the Index of Economic Freedom of 2006.
The political elite is also involved in various criminal businesses. Leading members of the military and police have cooperated with the illegal drug trade in Haiti
since the 1980s. The Service d'Intelligence National
, nominally a counter-narcotics agency created after the fall of Jean-Claude Duvalier
, participated in drug trafficking. After the 1991 Haitian coup d'état
which toppled Aristide for the first time, members of the coup regime, notably Chief of National Police Michel François
, were accused of drug smuggling. Later Beaudoin Ketant, a notorious international drug trafficker, Jean-Bertrand Aristide
's close partner, and his daughter's godfather, claimed that Aristide "turned the country into a narco-country; it's a one-man show; you either pay (Aristide) or you die".
According to the BBC, pyramid scheme
s "were only real economic initiative of the Aristide years." Estimated $200 million was lost in these scams.
At peak, Haiti's total external debt was estimated at 1.8 billion dollars, including half a billion dollars to the Inter-American Development Bank, Haiti's largest creditor. In September 2009, Haiti met the conditions set out by the IMF and World Bank's Heavily Indebted Poor Countries
program, qualifying it for cancellation of some of its external debt. This amounted to a cancellation of $1.2 billion. Despite this as of 2010 calls for cancellation of its remaining $1 billion debts came strongly from civil society groups such as the Jubilee Debt Campaign in reaction to the effects of the earthquake that hit the country.
In 2004 industry accounted for about 20 percent of the gross domestic product (GDP), and less than 10 percent of the labor force worked in industrial production. As a portion of the GDP, the manufacturing sector has contracted since the 1980s. The United Nations embargo of 1994 put out of work most of the 80,000 workers in the assembly sector. Additionally, the years of military rule following the presidential coup in 1991 resulted in the closure of most of Haiti's offshore assembly plants in the free zones surrounding Port-au-Prince. When President Aristide returned to Haiti, some improvements did occur in the manufacturing sector.
Haiti's cheap labor brought some textile and garment assembly work back to the island in the late 1990s. Although these gains were undercut by international competition, the apparel sector in 2008 made up two-thirds of Haiti's annual 490 million US dollars exports. USA economic engagement under the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act, from December 2006, increased apparel exports and investment by providing tariff-free access to the USA. HOPE II, in October 2008, further improved the situation by extending preferences to 2018.
Haiti's central bank, the Banque de la République d'Haïti, oversees 10 commercial banks and two foreign banks operating in the country. Most banking takes place in the capital city of Port-au-Prince. The United Nations and the International Monetary Fund have led efforts to diversify and expand the finance sector, making credit more available to rural populations. In 2002, the Canadian International Development Agency led a training program for Haitian Credit Unions. Haiti has no stock exchange.
Finding unemployment statistics from Haiti is very difficult because of the lack of publication of such data from the Haitian agencies in charge of collecting it. Most sources that we do have available come from United States agencies such as the Agency for International Development (USAID).
These numbers are highly speculative; many sources give vague ideas of the unemployment rating being (for example, in 2003) around 50%, giving the impression that the actual rate could be several percentage points higher or lower. Still, given that the sources of this data has remained the same for the past 15 years, we can at least see a trend of unemployment staying high throughout this period, but rising sharply in the mid to late 90's peaking at 70% in 1999 (2000 CIA World Factbook is the source for that number), and then decreasing to the usual rates of around 50% in recent years.
Haiti
Haiti , officially the Republic of Haiti , is a Caribbean country. It occupies the western, smaller portion of the island of Hispaniola, in the Greater Antillean archipelago, which it shares with the Dominican Republic. Ayiti was the indigenous Taíno or Amerindian name for the island...
is the poorest country in the Americas
Americas
The Americas, or America , are lands in the Western hemisphere, also known as the New World. In English, the plural form the Americas is often used to refer to the landmasses of North America and South America with their associated islands and regions, while the singular form America is primarily...
. Two-thirds of all Haitians depend on the agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
sector, mainly small-scale subsistence farming, and remain vulnerable to damage from frequent natural disaster
Natural disaster
A natural disaster is the effect of a natural hazard . It leads to financial, environmental or human losses...
s, exacerbated by the country's widespread deforestation
Deforestation
Deforestation is the removal of a forest or stand of trees where the land is thereafter converted to a nonforest use. Examples of deforestation include conversion of forestland to farms, ranches, or urban use....
. A macroeconomic program developed in 2005 with the help of the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
helped the economy grow 1.8% in 2006, the highest growth rate since 1999. Haiti suffers from higher inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
than similar low-income countries, a lack of investment (increasing however since the recent presidential seating), and a severe trade deficit. In 2005, Haiti paid its arrears
Arrears
Arrears is a legal term for the part of a debt that is overdue after missing one or more required payments. The amount of the arrears is the amount accrued from the date on which the first missed payment was due...
to the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, paving the way for reengagement with the Bank. The government relies on formal international economic assistance for fiscal sustainability. In 2006, Haiti held a successful donors conference in which the total aid pledged exceeded Haiti's request. Remittances are the primary source of foreign exchange
Foreign exchange market
The foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
, equaling nearly a quarter of GDP.
Economic history
Before Haiti established its independence from French administration in 1804, Haiti ranked as the world's richest and most productive colony. In the formative years of independence, Haiti suffered from isolation on the international stage, as evidenced by the early lack of diplomatic recognition accorded to it by Europe and the United States; this had a negative impact on willingness of foreigners to invest in Haiti. One very significant economic obstacle in Haiti's early independence was its necessary payment of 150 million francs to France beginning in 1825; this did much to drain the country of its capital stock. In 1838, France agreed to reduce the debt to 60 million francs to be paid over a period of 30 years. In 1883, Haiti made the final payment to France. Since then, and even in recent years, public spokesmen in Haiti as well as international academics and statesmen have denounced this event as the payment of an illegitimate debtOdious debt
In international law, odious debt is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred...
, in several cases calling on the French government to repay it (the French government has never been willing to repay it, though there was a hoax following the 2010 Haiti Earthquake
2010 Haiti earthquake
The 2010 Haiti earthquake was a catastrophic magnitude 7.0 Mw earthquake, with an epicentre near the town of Léogâne, approximately west of Port-au-Prince, Haiti's capital. The earthquake occurred at 16:53 local time on Tuesday, 12 January 2010.By 24 January, at least 52 aftershocks...
involving a fake website purporting to offer reparation payment on behalf of the French Government).
Since the demise of the Duvalier
Duvalier
Duvalier is a surname, and may refer to:* François Duvalier , nicknamed "Papa Doc", President of Haiti * Jean-Claude Duvalier , nicknamed "Baby Doc", son of François Duvalier and President of Haiti...
dictatorship in 1986, international economists have urged Haiti
Haiti
Haiti , officially the Republic of Haiti , is a Caribbean country. It occupies the western, smaller portion of the island of Hispaniola, in the Greater Antillean archipelago, which it shares with the Dominican Republic. Ayiti was the indigenous Taíno or Amerindian name for the island...
to reform and modernize its economy. Under President René Préval
René Préval
René Garcia Préval is a Haitian politician and agronomist who was the President of the Republic of Haiti from 14 May 2006 to 14 May 2011. He previously served as President from February 7, 1996, to February 7, 2001, and as Prime Minister from February 1991 to October 11, 1991.-Early life and...
(President from 1996 to 2001 and from 2006 onwards), the country's economic agenda included trade and tariff liberalization, measures to control government expenditure and increase tax revenues, civil-service downsizing, financial-sector reform, and the modernization of state-owned enterprises through their sale to private investors, the provision of private sector management contracts, or joint public-private investment. Structural adjustment agreements with the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
, World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, Inter-American Development Bank
Inter-American Development Bank
The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean...
, and other international financial institutions aiming at creating necessary conditions for private sector growth, have proved only partly successful.
In the aftermath of the 1994 restoration of constitutional governance, Haitian officials have indicated their commitment to economic reform through the implementation of sound fiscal and monetary policies and the enactment of legislation mandating the modernization of state-owned enterprises. A council to guide the modernization program (CMEP) was established and a timetable was drawn up to modernize nine key parastatals. Although the state-owned flour-mill and cement plants have been transferred to private owners, progress on the other seven parastatals has stalled. The modernization of Haiti's state-enterprises remains a controversial political issue in Haiti.
External aid is essential to the future economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
of Haiti, the least-developed country in the Americas
Americas
The Americas, or America , are lands in the Western hemisphere, also known as the New World. In English, the plural form the Americas is often used to refer to the landmasses of North America and South America with their associated islands and regions, while the singular form America is primarily...
. Comparative social and economic indicators show Haiti falling behind other low-income developing countries (particularly in the Western hemisphere) since the 1980s. Haiti's economic stagnation results from earlier inappropriate economic policies, political instability, a shortage of good arable land, environmental deterioration, continued use of traditional technologies, under-capitalization and lack of public investment in human resources, migration of large portions of the skilled population, and a weak national savings rate.
Haiti continues to suffer the consequences of the 1991 coup
1991 Haitian coup d'état
The 1991 Haitian coup d'état took place on 29 September 1991 when President Jean-Bertrand Aristide, elected 8 months earlier in the Haitian general election, 1990–1991, was deposed by the Haitian army. The coup was led by Army General Raoul Cédras, Army Chief of Staff Phillipe Biamby and Chief of...
. The irresponsible economic and financial policies of de facto authorities greatly accelerated Haiti's economic decline. Following the coup, the United States adopted mandatory sanctions, and the OAS
Organization of American States
The Organization of American States is a regional international organization, headquartered in Washington, D.C., United States...
instituted voluntary sanctions aimed at restoring constitutional government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
. International sanctions culminated in the May 1994 United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
embargo of all goods entering Haiti except humanitarian supplies, such as food and medicine. The assembly sector, heavily dependent on U.S. markets for its products, employed nearly 80,000 workers in the mid-1980s. During the embargo, employment fell from 33,000 workers in 1991 to 400 in October 1994. Private, domestic and foreign investment has been slow to return to Haiti. Since the return of constitutional rule, assembly sector employment has gradually recovered with over 20,000 now employed, but further growth has been stalled by investor concerns over safety and supply reliability.
If the political situation stabilizes, high crime levels wane, and new investment increases, tourism could take its place next to export-oriented manufacturing (the assembly sector) as a potential source of foreign exchange. , remittances from abroad constitute a significant source of financial support for many Haitian households.
The Haitian Ministry of Economy and Finance designed the Haiti economic reforms of 1996
Haiti economic reforms of 1996
The Haiti economic reforms of 1996 were designed to rebuild economy of Haiti after significant downturns suffered in the previous years. The primary reforms were centered around the Emergency Economic Recovery Plan and were followed by budget reforms....
to rebuild the economy of Haiti after significant downturns suffered in the previous years. The primary reforms centered around the Emergency Economic Recovery Plan (EERP) and were followed by budget
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
reforms.
Haiti's real GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
growth turned negative in FY 2001 after six years of growth. Real GDP fell by 1.1% in FY 2001 and 0.9% in FY 2002. Macroeconomic stability was adversely affected by political uncertainty, the collapse of informal bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
ing cooperatives, high budget deficits, low investment, and reduced international capital flows, including suspension of IFI lending as Haiti fell into arrears with the Inter-American Development Bank (IDB) and World Bank.
Haiti's economy stabilized in 2003. Although FY 2003 began with the rapid decline of the gourde due to rumors that U.S. dollar deposit accounts would be nationalized and due to the withdrawal of fuel subsidies, the government successfully stabilized the gourde as it took the politically difficult decisions to float fuel prices freely according to world market prices and to raise interest rates. Government agreement with the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF) on a staff monitored program (SMP), followed by its payment of its $32 million arrears to the IDB in July, paved the way for renewed IDB lending. The IDB disbursed $35 million of a $50 million policy-based loan in July and began disbursing four previously approved project loans totaling $146 million. The IDB, IMF, and World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
also discussed new lending with the government. Much of this would be contingent on government adherence to fiscal and monetary targets and policy reforms, such as those begun under the SMP, and Haiti's payment of its World Bank arrears ($30 million at 9/30/03).
The IMF estimated that real GDP was flat in FY 2003 and projected 1% real GDP growth for FY 2004. However, GDP per capita— amounting to $425 in FY 2002 — will continue to decline as population growth is estimated at 1.3% p.a. While implementation of governance reforms and peaceful resolution of the political stalemate are key to long-term growth, external support remains critical in avoiding economic collapse. The major element is foreign remittances, reported as $931 million in 2002, primarily from the U.S. Foreign assistance, meanwhile, was $130 million in FY 2002. Overall foreign assistance levels have declined since FY 1995, the year elected government was restored to power under a UN mandate, when the international community
International community
The international community is a term used in international relations to refer to all peoples, cultures and governments of the world or to a group of them. The term is used to imply the existence of common duties and obligations between them...
provided over $600 million in aid.
A legal minimum wage of 36 gourdes a day (about U.S. $1.80) was set in 1995, and applies to most workers in the formal sector. It was later raised to 70 gourdes per day. Actually this minimum is 200 gourdes a day(about U.S. $4.80).
Heavy corruption
According to a World Bank report in 2006, "In Haiti, the process of business regulations is complex and customs procedures are lengthy." On average, opening a business took 204 days. For comparison, the average was 73.3 days in Latin America and 16.3 days in OECD countries. It took an estimated 5 years and 65 bureaucratic procedures for a private person to buy land from the state. It took 683 days to register a property.All Latin American and Caribbean countries except Cuba and Venezuela enjoyed much more economic freedom
Economic freedom
Economic freedom is a term used in economic and policy debates. As with freedom generally, there are various definitions, but no universally accepted concept of economic freedom...
than Haiti on the Index of Economic Freedom of 2006.
The political elite is also involved in various criminal businesses. Leading members of the military and police have cooperated with the illegal drug trade in Haiti
Illegal drug trade in Haiti
The illegal drug trade in Haiti involves trans-shipment of cocaine and marijuana to the United States. It is a major shipment route. The island of Hispaniola, which Haiti shares with the Dominican Republic, places it in an ideal location for drug smugglers, between Colombia and Puerto Rico...
since the 1980s. The Service d'Intelligence National
Service d'Intelligence National
Service d'Intelligence National was a Haitian intelligence agency created by the US Central Intelligence Agency after the 1986 overthrow of Jean-Claude Duvalier. The unit, staffed by officers of the Haitian army, "engaged in drug trafficking and political violence"...
, nominally a counter-narcotics agency created after the fall of Jean-Claude Duvalier
Jean-Claude Duvalier
Jean-Claude Duvalier, nicknamed "Bébé Doc" or "Baby Doc" was the President of Haiti from 1971 until his overthrow by a popular uprising in 1986. He succeeded his father, François "Papa Doc" Duvalier, as the ruler of Haiti upon his father's death in 1971...
, participated in drug trafficking. After the 1991 Haitian coup d'état
1991 Haitian coup d'état
The 1991 Haitian coup d'état took place on 29 September 1991 when President Jean-Bertrand Aristide, elected 8 months earlier in the Haitian general election, 1990–1991, was deposed by the Haitian army. The coup was led by Army General Raoul Cédras, Army Chief of Staff Phillipe Biamby and Chief of...
which toppled Aristide for the first time, members of the coup regime, notably Chief of National Police Michel François
Michel François
Joseph-Michel François was a colonel in the Haitian army. As Haiti Chief of National Police he participated in the 1991 Haitian coup d'état, which overthrew Haiti's elected president, Jean-Bertrand Aristide. The Haitian Presidential candidate Michel "Sweet Mickey" Martelly is known to have...
, were accused of drug smuggling. Later Beaudoin Ketant, a notorious international drug trafficker, Jean-Bertrand Aristide
Jean-Bertrand Aristide
Jean-Bertrand Aristide is a Haitian former Catholic priest and politician who served as Haiti's first democratically elected president. A proponent of liberation theology, Aristide was appointed to a parish in Port-au-Prince in 1982 after completing his studies...
's close partner, and his daughter's godfather, claimed that Aristide "turned the country into a narco-country; it's a one-man show; you either pay (Aristide) or you die".
According to the BBC, pyramid scheme
Pyramid scheme
A pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public...
s "were only real economic initiative of the Aristide years." Estimated $200 million was lost in these scams.
Debt cancellation
In 2005 Haiti's total external debt reached an estimated US$1.3 billion, which corresponds to debt per capita of US$169, in contrast to the debt per capita of the United States which is US$40,000. Following the democratic election of Aristide in December 1990, many international creditors responded by cancelling significant amounts of Haiti's debt, bringing the total down to US$777 million in 1991. However, new borrowing during the 1990s swelled the debt to more than US$1 billion.At peak, Haiti's total external debt was estimated at 1.8 billion dollars, including half a billion dollars to the Inter-American Development Bank, Haiti's largest creditor. In September 2009, Haiti met the conditions set out by the IMF and World Bank's Heavily Indebted Poor Countries
Heavily Indebted Poor Countries
Heavily Indebted Poor Countries is a group of 40 developing countries with high levels of poverty and debt overhang which are eligible for special assistance from the International Monetary Fund and the World Bank.- History and structure :...
program, qualifying it for cancellation of some of its external debt. This amounted to a cancellation of $1.2 billion. Despite this as of 2010 calls for cancellation of its remaining $1 billion debts came strongly from civil society groups such as the Jubilee Debt Campaign in reaction to the effects of the earthquake that hit the country.
Agriculture, forestry, and fishing
Although many Haitians make their living through subsistence farming, Haiti also has an agricultural export sector. Agriculture, together with forestry and fishing, accounts for about one-quarter (28 percent in 2004) of Haiti's annual gross domestic product and employs about two-thirds (66 percent in 2004) of the labor force. However, expansion has been difficult because mountains cover much of the countryside and limit the land available for cultivation. Of the total arable land of 550,000 hectares, 125,000 hectares are suited for irrigation, and of those only 75,000 hectares actually have been improved with irrigation. Haiti's dominant cash crops include coffee, mangoes, and cocoa. Haiti has decreased its production of sugarcane, traditionally an important cash crop, because of declining prices and fierce international competition. Because Haiti's forests have thinned dramatically, timber exports have declined. Roundwood removals annually total about 1,000 kilograms. Haiti also has a small fishing industry. Annual catches in recent years have totaled about 5,000 tons.Mining and minerals
Haiti has a small mining industry, extracting minerals worth approximately US$13 million annually. Bauxite, copper, calcium carbonate, gold, and marble are the most extensively extracted minerals in Haiti. Lime and aggregates and to a lesser extent marble are extracted. Gold was mined by the Spanish in early colonial times. Bauxite was mined for a number of years in recent times at a site on the Southern peninsula. There are attempts to find commercially viable copper and gold deposits but thus far none have begun.Industry and manufacturing
The leading industries in Haiti produce beverages, butter, cement, detergent, edible oils, flour, refined sugar, soap, and textiles. Growth in both manufacturing and industry as a whole has been slowed by a lack of capital investment. Grants from the United States and other countries have targeted this problem, but without much success. Private home building and construction appear to be one subsector with positive prospects for growth.In 2004 industry accounted for about 20 percent of the gross domestic product (GDP), and less than 10 percent of the labor force worked in industrial production. As a portion of the GDP, the manufacturing sector has contracted since the 1980s. The United Nations embargo of 1994 put out of work most of the 80,000 workers in the assembly sector. Additionally, the years of military rule following the presidential coup in 1991 resulted in the closure of most of Haiti's offshore assembly plants in the free zones surrounding Port-au-Prince. When President Aristide returned to Haiti, some improvements did occur in the manufacturing sector.
Haiti's cheap labor brought some textile and garment assembly work back to the island in the late 1990s. Although these gains were undercut by international competition, the apparel sector in 2008 made up two-thirds of Haiti's annual 490 million US dollars exports. USA economic engagement under the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act, from December 2006, increased apparel exports and investment by providing tariff-free access to the USA. HOPE II, in October 2008, further improved the situation by extending preferences to 2018.
Energy
Haiti uses very little energy, the equivalent of approximately 250 kilograms of oil per head per year. In 2003, Haiti produced 546 million kilowatt-hours of electricity while consuming 508 million kilowatt-hours. Most of the country's energy from the burning of wood. Haiti imports oil, consuming about 11800 oilbbl/d, as of 2003. The Péligre Dam, the country's largest, provides the capital city of Port-au-Prince with energy. Thermal plants provide electricity to the rest of the country. Even with the country's low level of demand for energy, the supply of electricity traditionally has been sporadic and prone to shortages. Mismanagement by the state has offset more than US$100 million in foreign investment targeted at improving Haiti's energy infrastructure. Businesses have resorted to securing back-up power sources to deal with the regular outages. The potential for greater hydropower exists, should Haiti have the desire and means to develop it. The government controls oil and gas prices, to an extent insulating Haitians from international price fluctuations.Services
Haiti's services sector made up 52 percent of the country's gross domestic product in 2004 and employed 25 percent of the labor force. According to World Bank statistics, the services sector is one of the few sectors of Haiti's economy that sustained steady, if modest, growth throughout the 1990s.Banking and finance
Lack of a stable and trustworthy banking system has impeded Haiti's economic development. Banks in Haiti have collapsed on a regular basis. Most Haitians do not have access to loans of any sort. When reelected in 2000, President Aristide promised to remedy this situation but instead introduced a non-sustainable plan of "cooperatives" that guaranteed investors a 10 percent rate of return. By 2000, the cooperatives had crumbled and Haitians had collectively lost more than US$200 million in savings.Haiti's central bank, the Banque de la République d'Haïti, oversees 10 commercial banks and two foreign banks operating in the country. Most banking takes place in the capital city of Port-au-Prince. The United Nations and the International Monetary Fund have led efforts to diversify and expand the finance sector, making credit more available to rural populations. In 2002, the Canadian International Development Agency led a training program for Haitian Credit Unions. Haiti has no stock exchange.
Tourism
Tourism in Haiti has suffered from the country's political upheaval. Inadequate infrastructure also has limited visitors to the island. In the 1970s and 1980s, however, tourism was an important industry, drawing an average of 150,000 visitors annually. Since the 1991 coup, tourism has recovered slowly. The Caribbean Tourism Organization (CTO) has joined the Haitian government in an effort to restore the island's image as a tourist destination. In 2001, 141,000 foreigners visited Haiti. Most came from the United States. To make tourism a major industry for Haiti, further improvements in hotels, restaurants and other infrastructure still are needed.Labor force
As of 1995, the labor force was estimated at 3.6 million, but with a shortage of skilled labor.Finding unemployment statistics from Haiti is very difficult because of the lack of publication of such data from the Haitian agencies in charge of collecting it. Most sources that we do have available come from United States agencies such as the Agency for International Development (USAID).
These numbers are highly speculative; many sources give vague ideas of the unemployment rating being (for example, in 2003) around 50%, giving the impression that the actual rate could be several percentage points higher or lower. Still, given that the sources of this data has remained the same for the past 15 years, we can at least see a trend of unemployment staying high throughout this period, but rising sharply in the mid to late 90's peaking at 70% in 1999 (2000 CIA World Factbook is the source for that number), and then decreasing to the usual rates of around 50% in recent years.