The Economy

Haiti Table of Contents

HAITI'S LOW-INCOME, PEASANT-BASED economy faced serious economic and ecological obstacles to development in the late 1980s. The country's gross domestic product (GDP) in 1987 was approximately US$1.95 billion, or about US$330 per capita, ranking Haiti as the poorest country in the Western Hemisphere and as the twenty-seventh most impoverished nation in the world. The only low-income country--defined by the World Bank as a country with a per capita GDP in 1988 below US$425--in the Americas, Haiti fell even farther behind other low-income countries in Africa and Asia during the 1980s.

Haiti's economy continued to be fundamentally agricultural in the 1980s, although agriculture's role in the economy--as measured by its share of GDP, the labor force, and exports--had fallen sharply after 1950. Highly inefficient exploitation of the scarce natural resources of the countryside caused severe deforestation and soil erosion and constituted the primary cause of the decline in agricultural productivity. Manufacturing became the most dynamic sector in Haiti during the 1970s, as the country's abundant supply of low-cost labor stimulated the growth of assembly operations. Services such as banking, tourism, and transportation played comparatively minor roles in the economy. Tourism, a potential source of foreign-exchange earnings, expanded rapidly in the 1970s, but it contracted during the 1980s as a consequence of political upheaval and news coverage that erroneously identified Haiti as the origin of acquired immune deficiency syndrome (AIDS).

Haiti's agricultural wealth, coveted by many in colonial times, had waned by the mid-nineteenth century as land reform divided the island's plantations into small plots farmed by emancipated slaves. Changes in land tenure contributed significantly to falling agricultural output, but the failure of Haiti's leaders to manage the economy also contributed to the country's long-term impoverishment. Haiti's economy reflected the cleavages (i.e., rural-urban, black-mulatto, poor-rich, CreoleFrench , traditional-modern) that defined Haitian society. The mulatto elite dominated the capital, showed little interest in the countryside, and had outright disdain for the black peasantry. Disparities between rural and urban dwellers worsened during the twentieth century under the dynastic rule of François Duvalier (1957-71) and his son, Jean-Claude Duvalier (1971-86); Haiti's tradition of corruption reached new heights as government funds that could have aided economic and social development enriched the Duvaliers and their associates. By the 1980s, an estimated 1 percent of the population received 45 percent of the national income, and an estimated 200 millionaires in Haiti enjoyed a life of unparalleled extravagance. In stark contrast, as many as three of every four Haitians lived in abject poverty, with incomes well below US$150, according to the World Bank. Similarly, virtually every social indicator pointed to ubiquitous destitution.

As a result of the traditional passivity of the government and the country's dire poverty, Haiti has depended extensively, since the mid-1970s, on foreign development aid for budget support. The United States has been the largest donor, but it has frequently interrupted the flow of aid because of alleged human rights abuses, corruption, and election fraud. Most other development agencies have followed the United States lead, thus extending United States influence over events in Haiti. Although the major multilateral and bilateral development agencies have provided the bulk of foreign funding, hundreds of nongovernmental organizations have also played a prominent role in development assistance. These nongovernmental organizations, affiliated for the most part with religious groups, have sustained hundreds of thousands of Haitians through countrywide feeding stations. They also contributed to the country's political upheaval in 1986 by underscoring the Duvalier regime's neglect of social programs. The accomplishments of the nongovernmental organizations have proved that concerted efforts at economic development could achieve results in Haiti.

The prospects for development improved temporarily following Jean-Claude Duvalier's February 1986 departure; some important economic reforms took place, and the economy began to grow. Subsequently, however, renewed political instability forestalled continued reform. Economic progress was feasible, but entrenched political and social obstacles prevented Haiti from reaching that goal.

For more recent information about the economy, see Facts about Haiti.

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Source: U.S. Library of Congress