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World > North America > Haiti > Economy (Notes)

Haiti - Economy (Notes)


ECONOMY
Haiti remains the least-developed country in the Western Hemisphere and one of the poorest in the world. Comparative social and economic indicators show Haiti falling behind other low-income developing countries (particularly in the hemisphere) since the 1980s. Haiti now ranks 154th of 177 countries in the UN's Human Development Index. Haiti's economic stagnation is the result of earlier inappropriate economic policies, political instability, a shortage of good arable land, environmental deterioration, continued reliance on traditional technologies, under-capitalization and lack of public investment in human resources, migration of large portions of the skilled population, a weak national savings rate, and the lack of a functioning judicial system.

The 1991 coup and the irresponsible economic and financial policies of the de facto regime resulted in a sharp economic decline from 1991-94. 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 UN embargo of all goods entering Haiti except humanitarian supplies, such as food and medicine. The assembly sector, heavily dependent on U.S. markets, employed over 100,000 workers in the mid-1980s. During the embargo, employment fell below 17,000. Private domestic and foreign investment has returned to Haiti slowly. Since the embargo's end, assembly sector employment has gradually recovered to about 18,500. The Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE), enacted by the U.S. Congress in December 2006, provides new trade preferences for textile/apparel products that could boost production in the sector. However, growth has been stalled by investor concerns over security, lack of access to credit, and legal and physical infrastructure constraints.

Under President Préval (1996-2001), the country's economic agenda included trade/tariff liberalization, measures to control government expenditure and increase tax revenues, civil service downsizing, financial sector reform, and the modernization of two out of nine 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 international financial institutions (IFIs) intended to create conditions for private sector growth proved only partly successful, however. Workers in Haiti are guaranteed the right of association. Unionization is protected by the labor code. A legal minimum wage of 70 gourdes a day (about U.S. $1.70) applies to most workers in the formal sector.

Haiti's real GDP growth turned negative in FY 2001 after six years of growth. Following almost 4 years of recession ending in 2004, the economy grew by 1.5% in 2005 and 2.5% in 2006. But significant improvement in living standards would require an estimated doubling of the growth rate. Since the departure of President Aristide, the financial situation has stabilized. Inflation fell from 42.7% at end-2003 to 12.4% at end-2006. The interim government conducted a largely sound fiscal policy which has been followed by the Alexis government. But the traditional low revenue collection rate (roughly 9% of the GDP) constrains its ability to provide social services and invest in physical and human capital. External assistance (approximately $965 million from July 2004 through March 2006) as well as diaspora remittances (estimated at approximately $1.65 billion) remain critical to keeping the economy afloat. In November 2006, Haiti was approved for an International Monetary Fund (IMF) Poverty Reduction and Growth Facility (PRGF) and reached decision point under the Heavily Indebted Poor Countries (HIPC) Initiative.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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