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I am in agreement with Dr. Shamsie's arguments about the need for the international community to make rural Haiti a priority in its economic growth strategies, which clearly is not the case in the recent reports mentioned in her op-ed.  My question for her relates to free trade, and whether she thinks Haiti could implement a system in which there is free trade in the manufacturing sector (if it is ever rejuvenated), and a system of tariffs on agricultural products coming into the country in order to encourage domestic production and strengthen food security.

Today's questions are intensely complex and underscored by a CBC report last night on Haiti's attempt to raise the minimum wage from $2/day to $5/day. The Haitian legislature voted against the bill to raise the wage citing the example of Dominan Repulic where 115,000 jobs were lost after they raised the miminum wage. Apparently the legislature's priority is on creating new jobs. It also seems that international companies are calling the shots - many threatened to close their garment factories if the wages were raised. The report is available here - http://www.cbc.ca/w6/audio.html and begins at 21:56.

Who is leading Haiti's economic development? It looks like attempts to stimulate from within are controlled and mitigated by external interests? What power does Haiti have to take it's own path on economic development?

Here is the CBC news clip on Haiti;  minimum wages, a crippled Haitian legislature and international companies.

Is it not apparent to even the casual observer that if left to the status quo where international business calls the shots, development at best will only rise accordingly to a desired measure of profitability? In many circles of dialogue the conclusions are similar in which the very strategy to promote development through the leadership of international corporations falters or never materializes as described. In our own conditions within the developed world, we do allow a great deal of latitude, however; as we know an under regulated corporate body of companies can create disaster within our own borders. The international corporations should be part of the solution and be encouraged to participate, but as partners along with the rest of the international community. To build a 21 ^st century modern economy that is sustainable in Haiti does not require any thing that we in the developed countries do not already face. The people of Haiti really only require the transparent governance assistance that raises the infrastructure to a point of sustainable self reliance. I agree with the views expressed here and I would emphasize that a ground up approach starting with respect from the entire international community that no nation should be viewed as the next location of exploitation in the name of profit. An exploitation that never delivers what it promises and usually leaves the population worse off.

The issue of the $5/day salary is not new. If I'm not mistaken, Jean-Bertrand Aristide attempted to raise the minimum wage to $5 during his first term as President before the military coup d'etat forced him to flee the country.

Interestingly, the recent reports which Dr. Shamsie references in her article all advocate the development of urban manufacturing, and not simply in the textile sectors. However, as the CBC clips reveal, there are inherent tensions that come with this type of economic development that requires foreign investment to create jobs, tensions between the needs of employers and the employees, and "any work" versus "dignified work." Perhaps this is further evidence that more attention to rural development is necessary.

On a related note, perhaps it is worth exploring the connections between today's postings on economic growth and yesterday's on security.

Hi everyone,

Regarding Andrew's question.  There are groups within Haiti who are asking the government to place tariffs on certain staples, particularly those that would help reactivate local production.  Tariffs on rice, for instance, have been suggested. Those who argue against tariffs, on the other hand, believe that it would ultimately make rice more expensive for the average Haitian, with implications for food security.  My own view is that the Haitian diet needs to be expanded with local produce filling the gap that more expensive rice would create.   As Haitians have often told me, there was a time, not that long ago when rice was expensive (prior to the US flooding the market with cheap subsidized rice) and only eaten once a week. At that time other local produce formed the bulk of daily dietary needs. 

Thanks for posting the CBC Radio news story Juanita.  The debate over the minimum wage is important and speaks to a number of important issues: the merits of some development strategies over others, the power of various social forces in Haiti's political arena (and outside Haiti) to influence policy, and the prospects of political instability.   I'm referring to outsiders since Paul Collier's very influential paper on economic development in Haiti supports an export processing zone strategy.  To be sure, the majority of international donors favour this approach.  Carlo also supports this strategy in his interview, which I hope all have had a chance to hear.

Andrew,

The disparity in wages from the developed and the underdeveloped nations has and will continue to be a source of friction moving forward. Why is it so important to continue down this path? Has the use of wage disparity as a source of new profit created much of the instability we seek to overt, in Haiti and elsewhere? This model while highly successful for the corporations seems to have done little in way that could be considered sustainable for Haiti or any other nation where it has been applied. What would be reasonable as a new course of action towards economic development, that we move towards a more advanced and current economic ideology? What has the OECD recommended for the developed nations? Would any or all these recommendations apply in Haiti if a layer of assistance were applied in these directions?

I appreciate the statements that have been made regarding Haiti's economic development and food security. Like many countries in Africa, foreign staples dumped on the market - sometimes in the name of food 'aid' - have replaced local ones and are now the preferred food stock. Not only does this reduce food security, but it has also stunted the ability of local farmers to grow and sell popular staples at home and abroad. I see many of the same arguments for Haiti - that agriculture is a natural choice to rebuild a shattered economy - but that can be very difficult when domestic and international markets are hostile to what you're growing. Manufacturing and responsible resource extraction, which has been done in well-governed countries like Botswana and Mauritius, may provide more of a blueprint for Haiti.

The world is currently revaluing the strategies that caused the most recent recession. We should not be indifferent to best practices for ourselves at the exclusion of others. For an economy to function properly; human capital in the form labour and intelligence, culture and organization, financial capital consisting of cash, investments, and monetary instruments, manufactured capital including infrastructure, machine tools and factories, and natural capital made up of resources, living systems and ecosystem services all matter and are interdependent to thrive. Why would we want to even consider leaving out the most important ingredient for success, human capital, and exploit the others as aggressively as possible? Any strategy moving forward should be using the best of the best the world has to offer Haiti and elsewhere as an implicit prerequisite. Resource productivity evaluation has shown in research to be highly under utilized. The unreported costs to the overall resource pool especially in the case of Haiti with the level of deforestation as an example of many resource productivity weaknesses need to be reigned in and have an economy that is built around the mentioned requirements for an economy to function properly.

On Dr. Thompson's point about the relation between economic and human security, I think this is an often over-looked point in the state-building process. Whether it's Afghanistan, Sierra Leone or Haiti, economic security should be an integral part of the reform process. Unfortunately, due to it's complicated and long-term nature (as well-described above), it seems that 'harder' elements of security seem to come first, while economic consideration are assumed will come naturally once that hard security is provided.

Hi everyone,

I'm following the theme of agriculture production raised and especially Yasmine's comments of giving more room to local produce.  What is striking to me is that there is a demand for sugarcane (by those producing rum) in Haiti, which is not matched by the domestic supply, thus sugarcane is imported from the Dominican Republic.  I wonder if Yasmine could point us to what policies would encourage a greater supply of sugarcane in Haiti, are incentives needed? is direct investment needed? should there be a change in labour skills? or is the land no longer able to produce?

Hard security is important for the development of an economy that can support the population, as people are not willing to risk investment if they are not sure stability will ensue, as well as the government is not able to be helpful if it is tied up in dealing with security or is highly corrupt.  However, specifically for agriculture there is the problem of deforestation, which with hurricanes/heavy rains has made soil erosion worse and worse every year.  What are some solutions for improving the land as a resource? And also is there a land entitlement issue in Haiti to consider?

Some more comments on agriculture and economic development : Haiti could go beyond increasing agriculture production to agro-processing businesses.  Items such as coffee, mangos, sugar cane and rice are easily produced in Haiti and could be processed in country if the investments were made.  Who could make such investments? How much of an issue is the trade policy of other countries?  Are there obstacles (e.g. tariffs, subsidizations in the U.S.)?   Agro-processing is nice because it might encourage an increase in production for the rural areas, as well as provide jobs in urban centres (where the factories are installed, near port areas).

Currently, the only big employer of skilled labour that I know of in Haiti is Digicel (an Irish telecom company) that provides excellent and affordable cellular service.  There is a big security cost to this business, as the expats are followed by body guards 24/7.  Are there other big companies, industries that could potentially afford to move into Haiti and provide these more skilled jobs presently? If so, what are the current obstacles?  

Although agriculture is interesting and could move some people back out of the urban centres, it is important to have some employers for the urban centres where a disproportionately large amount of the population lives.

I think Caroline and others have raised some very interesting points here, and have illustrated the complexities involved with development in Haiti. One point that has not been raised so much thus far, and that I find fascinating, is the South-South linkages that Andrew Thompson mentioned in his paper. Perhaps instead of looking North for development aid and foreign investment, Haiti should be looking South for both expertise on EPZs and preferential access to markets. As many countries around the region have experienced and overcome similar problems that exist in Haiti, this could be a better fit than looking to the US and Canada, which have a lot more baggage.

greetings all

a couple of thoughts on ag production since that is where the conv seems to be.

- having funded small-scale ag projects in haiti and the dr and also worked with large ag producers in the dr, it is rare, if ever, where i've been to a community that was self sufficient or where the diet was better than in urban areas. even in the dr where farmers had access to more credit, better materials, better infrastructure, and the farming knowledge was higher, (training programs, better ngos, etc) people in citiies still eat, or ate, better. cheap mass produced food really is much cheaper careful about romanticizing small scale rural agriculture very few of the farmers i knew actually liked it and none of the kids wanted to stick around. even in the DR where things were better, being stuck out in the middle of nowhere with no tv let alone electicity, was not too appealng. in haiti. i think of southern haiti or the western tip, anse d'hinault, etc, rich ag areas. small scale ag is problematic for a host of reasons. the cooperative movement improves the situation and those operations tend to raise incomes. a LOT of money went into groups like the papaye peasant movement, but i don't know that the results have been sustainable in that the movment continues and continues to raise living standards. i lost touch with that group a while ago. cooperativism works well in the DR and allows smaller farmers to hang on but it was always my perception that it was the larger farms that actually fed the country. and scaling up has been problematic in haiti for historical reasons. jumping around here, speaking of dumping food into the country, let's not forget about the dr with milk, chicken and eggs. raising tariffs on food will raise costs for people and lower consumption, it will also reduce the import bill. but there almost riots in haiti last time food got expensive. i don't see any government pushing this idea. couple of other thoughts. i think haiti has more agronomists per c

Good afternoon all,

Thanks for the interesting discussion. The talk about EPZs made me think of Paul Collier's report on Haiti to the UN Sec. Gen -- "Haiti: From Natural Catastrophe to Economic Security," (http://www.focal.ca/pdf/haiticollier.pdf). He mentions that in large part, Haiti's comparative advantage may come in the form of its trade agreements with its northern neighbours: "Haiti has a massive economic opportunity in the form of HOPEII. Uniquely in the world Haiti has duty-free, quota-free access to the American market guaranteed for the next nine
years, with generous rules of origin well-suited to the garment industry."

What are the risks of establishing EPZs, or special economic zones? How might they lead to problems in Haiti? If successful, would they improve conditions elsewhere in the country?I'm curious what people see as the downsides to this kind of development approach.

soory, more agronomists per capita than any place else in the hemisphere, preval is an agronomist. and like most agronomists in the country he is not working in agriculture. it was donor money that trained the agronomists.

on the minimum wage, raising it will be counterproductive. you'll have one sector where people are BY LOCAL STANDARDS massively over paid. especially compared to the regional competition. i don't know how many highly skilled people digicel is bringing in, you have i think 5 cell phone companies and i saw mostly korean technicians and haiti support staff. the private sector is constantly complaining about not being able to find qualified labour, mechanics, etc. haitians flee for more money but also security. so private sector are bringing in skilled people from elsewhere.

countries that have managed to leave poverty have grown their way out (only successful case of foreign aid helping that i can think of is spain)  and capacity to govern is lacking, technical and political. the economics of growth aren't that difficult haiti has some prospects, how to manage the process is what is lacking and until that is solved i'm not that optimistic. so, small scale rural ag will keep people (poorly) fed but not much more.

To tie my point into today's earlier discussion -- would Haiti lose some of its competitive advantage in textiles and other labour intensive industries with a $5/day minimum wage? Might this be used as a way to maintain low wages/exploitative working conditions? Are industries predicated on low wages really desirable?

Bob,

Maybe there would be less baggage and the leadership roles should be centered around the South to South as has been described. The tensions over motives could drastically be reduced. Though I would not want to further the problems associated with the baggage, I believe however; Aid should not be centered around a leadership role but be about doing the right thing for humanity as a globally inclusive concept.

Thank you Mr. Dade for highlighting some of the challenges with agriculture initiatives in Haiti.  Although it may not be the solution, what I think would be interesting to develop is whether there are government blockages or rather lack of incentives to get any initiatives off the ground (either agricultural or not).  I still believe that the government structure currently is administratively inefficient and riddled with problems of corruption.  And until this is dealt with any attempts at economic development will not become as successful as hoped - this might just mean that donors should insist on more stringent reporting.

To clarify a point I made earlier, the Digicel jobs I was thinking of for Haitians are not the highly skilled technical jobs (which I agree are held by expats), but those of sales agents, accountants, human resources, etc... which I believe are far more attractive to Haitians than working in the fields.  There are also the banks (several including the Bank of Nova Scotia), but these two sets of companies obviously do not cover the needs for employment, so I was looking for ideas on what other companies/services could come in with a wide range of jobs for the urban population.  Might there be examples of companies in other post-conflict countries? Or companies from the Southern countries that are looking for new markets and have a product that is attractive to the Haitian population?  

to burt's point about wage pressure and job choices, problem is haiti does not have many options, it's a case of your only choice. but wages are not the only factor, labour productivity, which here i would define as unit produced per person hour and the dr holds an edge. so, it's never just how much you pay. you could pay someone in haiti $1 an hour and someone in the DR $5 an hour but the cost per unit in haiti could be higher and it would make more sense to go to the DR.

on south south cooperation. i'm not sure about that for economic growth, there is an element of competition but i think in terms of managing working conditions in maquilladoras that is a possibilty, best practice for labour standards, look at records of companies, reporting, etc. so maybe for the management

for skilled jobs, yes, you are right, the accountants, etc. problem in haiti is that these types of investments are predicated on the diaspora. so how do you grow beyond cell phones and money transfer? there is small tourism market (actually good example, about 1 million canadians a year visit mexico and cuba, so those countries have a nice non-diaspora tourism business, in comparision there are only +/- 100k haitians in canada if half of them go back each year for a week for 'vacation' you're looking at  350k  nights,  not much but it would help. construction is another possibilty, more secure titling, better system for property rights and financing and you could have something akin to what bancoagricola in el salv is doing, issuing mortages to el salvadorans in the us for houses in el salv. and if you had land titles (majore investment) and functioning courts to enforce property rights you could really get money into people's hands. again, this is  not rocket science. the problem is regulation and management. haitia has already had a financial crisis in the cooperative (financial, not agriculture) sector, ponzi schemes, the whole works. while land titling would be a boon it could also lead to d

Posted on behalf of Yasmine Shamsie, who just might have the last word of the evening...

I agree that agriculture and rural development is not a development solution.  Tourism, some agro-processing, as well as some manufacturing is needed.  However, few donors are supporting rural development.  At the same time, the EPZ model is based on the super-exploitation of labor (very low salaries, no social security, etc.)’ ie it doesn't supply a living wage.  This means that even the trickle-down effect of the employment generated tends to be minimal.
Finally I find it frustrating that it is dubbed as a success in the region... including the DR.  A brief look at the impact of trade-oriented development in the region as a whole reveals the model’s poor record. We all know that export-assembly manufacturing has deep roots in the Caribbean. ‘Operation Bootstrap’, then in the 60s the Mexican Border Industrialization Program, a maquiladora model of development that, once again, targeted US industries such as apparel that needed to cut production costs because of the stiff competition they were experiencing. Then, in the 1970s, a number of Caribbean countries – Barbados, the Dominican Republic, and Haiti – followed this trend, encouraging the establishment of assembly plants geared to the US market. (It provided a lot of jobs in Haiti but the vast majority of Haitians remained unspeakably poor) Ronald Reagan’s Caribbean Basin Initiative (CBI) capped these initiatives in 1982.  This isn't the place for a discussion of the CBI, but economists who study these things (Mortimore 1999) have concluded that apparel exports, which were expected to act as a springboard to deepen the industrialization process in CBI countries, actually ‘truncated it’. And, a recent assessment of the CBI’s performance argues that....  (continued in next comment)

....... success was unevenly distributed across the region, noting that Haiti’s experience with the model was poor at best (Potoker and Borgman, 2007: 112). The assessment offered by Caribbean experts Payne and Sutton (2001: 225) is more concise and direct: ‘the CBI amounted to very little’. 

Given that this trade-enhancing approach delivers poor jobs, with no spin offs, and absolutely no guarantee of permanence, donors need to devote only a small part of their energy and resources toward this development strategy. "

lead to disaster. think of us mess but with an even less educated populace and even weaker govt. i can't think of another country in the hemisphere that is as weak as haiti in terms of technocrats and goverance capacity. if someone has a brilliant idea how to drop in an educated mid-level management class they would get the noble prize. this lack of capacity is, i think, why collier pointed to epzs, fairly easy to manage, give the government one thing to work on so it is not spread too thin. we have attempts in the past, the attempt to train agronomists, attempts to bring in the diaspora, none have been successful

in response to yasmien

other caribbean countries have more options, more educated work force, better infrastructure (physical and other wise) better environment, better legal systems, more trained people, etc, etc. haiti just doesn't have those options.

and let me close with a point from my interview. the country needs to generate tax revenue. it cannot continue indefinitely to rely on donors to pay for the expense of running the govt. you look around at the options available and there simply aren't many. moving from maquilloras to other things can be done, requires a strong government, leadership, discipline. so, i  share your pessism that it will work in haiti. but again, the problem is, what else are you going to do to generate income? the status quo is untenable. i don't see canada putting in 115 million a year forever nor do i see brazil sticking around forever. how do you pay government salaries, how do you pay for police? current system may not be just or fair, but until it changes we and haiti are stuck. so what do you do when you have to pay police next week?

Thank you to our panelists and participants for today's engaging and diverse discussion. Please join us tomorrow for the final discussion in this week's look at Multidimensional Security in Haiti - Socio-Political Stability: a Standard Registration System for Haitians. Take a moment to familiarize yourself with the panelists and their points of view for tomorrow.

 - Audio Interview with Robert Fatton, Professor of Government and Foreign Affairs, University of Virginia [LISTEN]  [READ TRANSCRIPT]
-  Mariana Costa, Specialist, Civil Identity Program, Organization of American States [READ]  [DOWNLOAD]
- Luc Lapointe, National Coordinator, Haitian Civil Registry, Organization of American States (Contribution forthcoming)