Economic Development Of Haiti: The Factors Of Inefficiency And Strategies Needed

Abstract

In the Western Hemisphere, Haiti is classified among the poorest nations in America. In this report, the factors, or rather obstacles, which contribute towards Haiti’s poor economic development have been identified and an appropriate development strategy suggested. Economic development is the process by which a nation improved through production and availability of life-sustaining products, better living standards appropriated by higher incomes and the freedom that individuals and groups, the initiators and drivers of economic development, have in making both social and economic decisions. The general indicators of economic development include life expectancy, poverty rates, per capita income and education and literacy levels. Various factors lower Haiti’s economic efficiency and hence should be rectified for the nation to perform better in terms of economic growth. Such factors include political instability, corruption, a poor education system, among others. The nation needs to adopt the infrastructural development strategy as it will assist in improving the nation’s infrastructure such as access to quality education and health, and a good transport system, which highly contribute towards a nation’s economic development.

Haiti’s Resource Endowment and Production

Haiti is endowed with various resources. Some of the natural resources with which the nation is blessed with include oil, natural gas, gold and copper. Haiti is among the nations of the world with significantly large oil reserves. The nation currently has identified close to twenty oil reserves for drilling activities, where 5 of them are very crucial, having the capability of producing higher amounts of oil. Haiti is bordered to the East by the Dominican Republic, which covers the rest of Hispaniola, to the South and West by the Caribbean, and to the North by the Atlantic Ocean. Human capital generally indicates the knowledge that an individual acquires from life at home, school, job training and experience. Human capital, overall, shows a nation’s education level and its labor force. Haiti has low levels of literacy as its education standards are still low. The nation’s literacy rate stands at 61%, which is below the expected rate of 90% in America and Caribbean Nations. 90% of schools in Haiti are owned privately. Parents who are capable of paying for their children’s fee enrol them, while those who are poor only take their children to school when they can afford school fees. Primary school age is prolonged in Haiti up to about 16 years. The low literacy rates have continued to undermine Haiti’s human capital as the majority lacks the necessary skills in accordance with the job market. In terms of Gross Domestic Product (GDP) and trade, Haiti has been lagging behind in the Western Hemisphere. Its average GDP averages at around $7 billion. From the data, it is obvious that Haiti has an extremely low GDP and this has contributed towards its low economic growth. The Haitian Annual Gross Domestic Product growth rate currently stands at 1. 2% which is quite a low rate of economic growth. The Agricultural sector is the second highest contributor to the nation’s GDP at around 21. 9% after the service sector, which accounts for 57. 3% of its GDP. The mining sector contributes around 1% of the nation’s GDP, which is quite low. The Agricultural sector employs the majority of Haitians, accounting for two-thirds of the nation’s labour force whereby more than one million Haitian families have small subsistence holdings. The Haitian exports are currently estimated to be more than $960. 1 million with major exports being from the Agricultural and Manufacturing sectors of the economy.

Haiti’s Governance and Stability

Haiti was a French colony, until they attained their independence in 1804. Since 1957, Haiti has been subjected to 29 years of dictatorial leadership by Francois Duvalier, and during his rule, 30,000 Haitians were killed. Even after establishment of democracy in 1986, political instability and corruption persisted under the current leadership of President Moise, who was under investigation for embezzling. The nation spends a small percentage of its GDP, such as 5% on health, 13% on education and even less on its military, approximately less than 1% (World Bank). This, in a way, gives a hint of the nation’s political instability reflected in the nation’s military spending, when it is the most crucial sector in any country.

2. 0 Haiti’s Economic Development

A nation’s level of economic development is indicated by various indicators such as the unemployment rate, life expectancy, health and the literacy rate. For Haiti, the above four indicators have been analysed. The unemployment rate in Haiti is estimated to be at 14%, life expectancy at 64. 5 years, one-fourth of births are attended to by a doctor (health) and 60. 7% of Haitians can read and write. These indicators show that Haiti’s economic development is really poor compared to other nations around the region, such as the Dominican Republic, which has a higher life expectancy of 73. 86 years, a lower unemployment rate of 5. 5%, a higher literacy rate of 93. 78% and 68. 6% of births attended to by doctors.

Obstacles to Haiti’s Economic Development

The infrastructural sector in Haiti has highly contributed to its low rate of economic development. Infrastructure is referenced as the organizational and physical structures, as well as facilities that help drive the economy, inclusive of but not limited to hospitals, railways, roads, schools and air transport. A case in pointer within the education system, is the inadequacy of schools. It is also posited that an average of 90% of the schools are privately owned and the poor are forced to pay fees to enrol their children in school. The earthquake of 2010 was further debilitating to the education sector, as it halted the development of school structures and facilities. In the Haitian health sector, healthcare is barely accessible as a result of there being few hospitals and the inadequacy of healthcare facilities. The transportation sector in Haiti further hinders economic development since transportation networks such as roads and railways are inadequate, unavailable and poorly constructed. This makes them susceptible to natural disasters. It is advanced that a nation’s infrastructural system is impacted by the susceptibility of structures and resources to destruction from natural disasters. An example is the nation’s destruction from the four hurricanes that hit in the year 2008 where 800 people perished, and infrastructural facilities and structures were destroyed. It is recommended that in this vein, infrastructure should attain high quality standards, making them more resilient in the face of natural disasters. Another main cause of low economic development in Haiti is its state of political instability and exposure to bad and dictatorial leadership. In 1957, the United States withdrew from the nation. This move seemingly exposed Haiti to corruption, organized crimes, violent dictatorial leadership and political instability. In a global ranking, Haiti was placed among the top fifteen of the most corrupt countries. The country is also ranked, by the World Bank, at the 152nd position in reference to its state of political stability, where government performance is very poor at an efficiency of -2. 06. Due to its state of governance and political instability, Haiti is unable to create a stable and attractive business environment for both the domestic and the foreign investors. The tourism sector in the nation has also suffered a major blow since 2010, where insecurity kept tourists at bay. It is crucial for Haiti to do away with political instability and poor governance, if its economic development is to grow, most especially from the tourism sector.

Haiti’s Development Strategy

In light of the outlined observations, it is possible to develop a functional development strategy for Haiti. A modernization school of thought approach should be taken up especially in the infrastructural sector. This is necessary in the health and education facilities, and roads and internet networks. As earlier stated, poor infrastructural facilities cause an economic development lag in the nation. This thus necessitates the adoption of development strategies in the various sectors and their facilities. A strong development strategy is one that actually improves the said sectors, in terms of quality, accessibility, adequacy and resilience. Where quality education is accessible and available, the labour force attains high levels of skill. A nation’s productivity is hence bound to improve since high skill level translates into improved quality and quantity of the products availed. A skilled labour force in any nation is positively and highly correlated to increase in output (goods and services) and a high work quality. This results to efficiency arising from a decline in the costs of production. This kind of improved productivity enable attainment of a nation’s output, ultimately leading to improvement in economic growth. The state of a nation’s well-being also improves with accessibility of quality education. Education enables people to acquire the necessary skills and information that would accord them quality healthcare and peaceful socializations. As the welfare of the people increase with access to quality education, political interests are born. In pursuit of their democratic rights, they manage to create a peaceful and attractive political environment that enables the prospering of business as well as social activities. Ivers (2011) posits than an increase in accessibility and quality of healthcare improves the general health of all, increasing their productivity levels. Quality healthcare provision protects the well-being of citizens by increasing their productivity levels as a result of good health and high energy levels. Access to quality healthcare also increases the life expectancy, increasing the productivity timeline of employees, who live longer to participate in economic growth. The rate of mortality also generally declines. When the road transport network is of high quality, there is ease in the movement of goods and services, as well as individuals, implying that economic activities can take place faster and at a cheaper rate, increasing productivity. One of the problems that a good transport network attempts to eliminate is that of congestion. Time that could be wasted navigating transport connectivity can be channelled into better productivity in terms of producing quality and sizeable quantities of goods and services. Delay in delivery of some products could also prove fatal and wasteful as some of these products are perishable and have to be delivered very fast. The transportation of raw materials and resources used in the production process also becomes easier, minimising costs that could be associated with late deliveries resulting from wasted time during transportation. The vulnerability of Haiti to natural disasters is a weakness for any policies or strategies that may be employed. It is susceptible to destruction from disasters such as hurricanes and earthquakes, where infrastructure may be destroyed despite attempts at improvement. Development strategies meant to improve economic development in Haiti are faced with huge corruption scandals. It is almost impossible to implement policies and strategies due to corruption, since any allocation of money and resources is subject to embezzlement by powerful figures within the political sphere. Investigation of these corruption cases and the subsequent consequences of justice to the said individuals is unlikely since the government has low integrity levels estimated at 20. 3 and the judicial system in Haiti also has low efficiency levels estimated at 25. 3. Such strategies do require funding in their implementation. This implies that Haiti has to rely on grants and aid, especially from USAID that aims to stabilize a country’s level of economic development. This strategy is a long-term solution, and hence realization of its benefits is bound to be after some time. Thus time is not considered a hindrance because the benefits of the strategy will be later realized. The subsequent success of the implemented policies and strategies is bound to be a game changer for Haiti. The nation is expected to be transformed by new and high economic growth levels. An increase in the nation’s economic growth will be due to a general increase in its output or it’s GDP as a result of increases production. Economic growth is then bound to translate into economic devilment for Haiti, which implies an increase in the quality of life, standards of living and the well-being of citizens. When quality infrastructure, healthcare, education and working conditions increase GDP per capita and subsequently increases the quality of life for all, then economic growth has led to economic development. Economic development is apparent in the analysis of intrinsic personal factors such as low poverty rates, increased literacy and education rates, increased life expectancy and improved environmental conditions irrespective of production activities.

Conclusion

Haiti is among the poorest nations in the Caribbean region. The nation’s poor economic growth has been attributed to various factors such as political instability, corruption, poverty, natural disasters like earthquakes and poor infrastructure in general such, as low-quality education and inadequate health facilities. The nation should adopt various development strategies. One of them is the development of its infrastructure as it is among the most significant determinants of economic development. The nation should consider developing infrastructure, which is resilient to natural disasters as it is highly affected by them.

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