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mdibasco@bu.edu U96565117
EC102 DD
Jay Zagorsky
EC102 D2
Eyno Rots
Boston University
Haiti-t or Love it
The Modern Day Model of Inequality
Martin Ibasco
EC102
Dominican Republic, in between the Caribbean Sea and the North Atlantic Ocean, is
Haiti. Formally known as the Republic of Haiti,
the country is governed by a republican administration that has been independent since
January 1, 1804.
Despite being a free market economy benefitting from low labor costs and tari free
access to the US for most of its exports, corruption is prevalent in Haiti. The eects of which
have been passed on to most of the population, maintaining high levels of poverty (80% of
the population living under the poverty line of $2 per day) together with low levels of education (more than 50% of children aged 4 to 12 are not enrolled in school). Bearing in mind
Haitis susceptibility towards natural disasters, the continuous growth of its economy can
only be considered as dependable as the stability of a torn meniscus.
This paper will explore the dierent macroeconomic trends in the history of Haiti, util-
izing factors such as growth, debt, and labor, in conjunction with the current state of widespread poverty and income inequality present in its society.
Martin Ibasco
EC102
What is it?
How is it calculated?
GDP is the sum of
In formula form:
process of production.
GDP = C + I + G + X - M
GNI is the sum of GDP, Net
The sum value of GDP plus net
GNI
Types
After defeating the French forces on January 1, 1804, Haiti was declared an inde-
pendent nation. Exactly fifty-nine years later, on January 1, 1863, Abraham Lincoln recognized Haiti, authorizing the provision of tari free exports to the US, commencing Haitis
route towards economical
Nominal"vs"Real"GDP"
(199142011)&&
Real"GDP""
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1991"
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2004"
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2009"
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Billions&
Total&GDP&
Nominal"GDP"
progress.
Year&
Martin Ibasco
EC102
the GDP of the country decreased significantly, plummeting a net of 21% over the four years.
It was only in the latter part of the 1990s that Haitis GDP improved, soaring 10% (Real GDP)
in 1995 when UN peacekeepers started replacing US troops. The election of Rene Preval reinforced this growth as, after his election in 1996, Real GDP grew at a constant rate of
around 3% per year all the way till 2000.
In the years of the 20th century there has been constant growth in the real GDP of
Haiti. There have been occasional dips which are attributed to the natural disasters that
strike the country such as the severe floods that occurred in 2004 causing a decrease of 4%
in real GDP and the massive earthquake that struck Port-au-Prince, Haitis capital, causing a
5% decrease in real GDP.
In 2007 there were over 1.5 million Haitians working abroad sending more than $1.65
billion in cash to relatives in Haiti. This amount is equivalent to about 30% of the countrys
GDP during that year, emphasizing the significant impact Haitians living abroad have on their
home countrys economy.
Nominal&GDP&vs&GNI&
(2004;2011)&
Real&GDP&vs&GNI&&
(2004<2011)&
Real"GNI"
15"
10"
5"
0"
2004"
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Year&
2011"
Billions&
Nominal"GDP"(current"US$)""
Total&Amount&
Billions&
Total&Amount&
Real"GDP"
Nominal"GNI"(current"US$)"
8"
6"
4"
2"
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2004"
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Year&
Comparing real GDP with real GNI, there is a discernible dierence in the amount con-
tributed to the Haitian economy with real GNI contributing around 70% more for every year.
Though this is the case, comparing nominal GDP with nominal GNI, GNI contributes an average of 1% more, noting that even though there are over 1.5 million Haitians working abroad
contributing remittances to Haitis economy, they only contribute a small percentage of
Haitis total economical pie.
Martin Ibasco
EC102
In respect with other countries, there is a high risk for being infected with diseases in
Haiti. In 2009, Haiti ranked 29th out of 153 countries in HIV/AIDS deaths that year with 7,100
deaths. The adult prevalence rate that year was also relatively high at 1.9% with 120,000
people living with HIV/AIDS. Despite this, there has been a steady rise in the total population
in Haiti, with an average yearly increase of around 1.7% from 1990 all the way to 2011. In
conjunction with total population, the total labor force has also been increasing from 1990 all
the way to 2010, with a slightly higher average yearly increase of about 2.2%.
Millions&
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1990"
1991"
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2011"
Total&Popula*on&
Total&Popula*on&
(199062011)&
Year&
Total"Labor"Force""
4.5"
4"
3.5"
3"
2.5"
2"
1.5"
1"
0.5"
0"
1990"
1991"
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Millions&
Total&Labor&Force&
(199062010)&
Year&
Martin Ibasco
EC102
Relative to its total land area of 27,560 square kilometers, Haiti is a moderately sized
country with a population of around 9.9 million people, ranking 88th out of 239 countries in
terms of population size. Segmenting the whole population by age, it is apparent that Haiti
has a fairly young population with 96% of individuals being below 64 years of age. Of the
youth, 35% are incapable of working while seniors (those above 64 years of age) consist only
4% of the population. With only 39% of the population unable to work, Haiti has a fairly large
labor force of 4.81 million to support the growing economy.
Percentage)Total)Popula/on)by)Age)
(July)2013))
Above%64%%
4%%
Ages"15064"
0"14%%
35%%
25"54%%
35%%
15"24%%
21%%
Ages"15024"
80"
60"
40"
20"
0"
1990"
1991"
1992"
1993"
1994"
1995"
1996"
1997"
1998"
1999"
2000"
2001"
2002"
2003"
2004"
2005"
2006"
2007"
2008"
2009"
2010"
2011"
Percentage)Par*cipa*on)
55"64%%
5%%
Labor)Force)Par*cipa*on)Rate)by)Age)
(199092011))
Year)
Using the information given by percentage total population by age and labor force
participation rate by age, the average labor force participation rate for the age group 25 to
64 years old as well as the total population participation in the dierent age groups was determined.
Age Group
Percentage of
Total Population
Total Population
Participation in Age
Group
15-64
61%
6,039,000
68.87%
4,166,910
15-24
21%
2,079,000
39.60%
831,600
25-64
40%
3,960,000
84.23%
3,335,310
Martin Ibasco
EC102
Age)Dependency)Percentage))
(199092011))
90"
80"
70"
60"
50"
40"
30"
20"
10"
0"
19
90
19 "
91
19 "
92
19 "
93
19 "
94
19 "
95
19 "
96
19 "
97
19 "
98
19 "
99
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00
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20 "
10
20 "
11
"
100"
Percentage)of)Working)Age)
Year)
the dependent.
In 2012 Haitis exports totaled $785 million or around 11% of its GDP. Of the com-
modities that were exported, most were agriculture products such as cocoa, mangoes, and
coee. If the countrys GDP was segregated by sector, agriculture would compose 25% of
total GDP, with an occupational labor force of 38.1%. Considering that of 27,560 square
kilometers available, 18,400 square kilometers are being used for agricultural purposes
(66.76% of all available land) Haitis economy can be said to be dependent on agriculture.
With agriculture economies requiring large amounts of labor, the trend of a growing
population along with an increasing labor force, will ensure future growth in Haitis currently
modest economy.
Martin Ibasco
EC102
Historically speaking, Haitis first incurred debt was on January 1, 1804, the day it
gained independence. After the successful rebellion, France, in admittance of defeat, demanded compensation for lost property and freed slaves. The debt was priced at 150 million
gold francs to be paid over the next 122 years. With the acceptance of the debt, one colonizer was merely traded for another.
As of 2012 Haitis external debt stood at $1.125 billion, a 67% increase from the
$674.6 million external debt the country had on 2011. The large increase in debt size is due
to the lack of promised financial aid to continue the reconstruction eorts from the aftermath
of the 7.0 earthquake that the country two years back. Contributing to the debt was the deficit of $113 million incurred during the year as government revenue was $1.001 billion while
government expenditures was $1.114 billion.
Macroeconomics in Simple Terms
Terminology
What is it?
The sum of public, public guaranteed, and private non-guaranteed long-term debt, use of IMF
IMF
financial stability, facilitate international trade, promote high employment and sustainable
International Monetary Fund
Billions'
Amount'
Total'External'Debt'Stocks'
(1990<2011)'
2.5"
2"
1.5"
1"
0"
1990"
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0.5"
Year'
Martin Ibasco
EC102
Looking at the graph of total external debt stocks, it is apparent that from 1990 all the
way to 2008 there has been an upwards trend in the total debt incurred by Haiti. It was only
in 2009 onwards, when Haiti met the requirements of the IMFs HIPC (Heavily Indebted Poor
Countries) initiative that the countrys debt showed a significant downwards trend, decreasing by an annual average of 26%. The IMF has given Haiti around $1.2 billion in debt relief so
far.
Ranked as 154th out of 205 in the world in terms of debt it seems that Haiti has a
moderate debt when compared to other economies such as Nigeria (ranked 93rd out of 205)
with a debt of $10.1 billion. When comparing debt in terms of debt per capita, Haiti has a
higher debt per capita of around $113 compared to Nigerias debt per capita of $57. Considering that 80% of the population is living under the poverty line of $2 per day, this 98% difference in debt per capita merely exemplifies the massive burden current Haitians face, and
with Haitis yearly budget deficit and dependence on foreign aid, the next generation of Haitians may face serious problems.
Martin Ibasco
EC102
Poverty and corruption, are amongst, if not, the most commonplace happenings in
Haiti. Considered the poorest country in the Western Hemisphere, 80% of Haitis population
lives under the poverty line, having an income of less than $2 per day. Even worse is that
54% of the total lives in abject poverty, having an income of less than $1 per day.
Looking at the figures of Haitis economy, one would assume that Haiti, despite the
large amounts of debt, is stable and growing economy. Most of the numbers show that
Haitis GDP, population, as well as labor force has been, and is predicted to grow in the future. The dierence between the perception and reality of Haiti is mostly due to the corruption prevalent in Haitis government, with the poor getting poorer while the rich get even
richer. As described by BBC news, the enormous gap in wealth is due to 1% of the Frenchspeaking mulattos (a mix of black and white) owning nearly half the countrys wealth.
One of these elite mulatto families are the Bigios. The Bigio family settled in Haiti in
1896 and established their name in the Haitian economy, owning a group of diversified group
of companies under the name of the Gilbert Bigio Group. Segregating the companies by industry, the family operates a fully pledged oligopoly under almost all industries such as agriculture, construction, consumer goods, energy, environmental service, infrastructure, telecom, trading, and transportation. With such a diversified group of companies, one would figure that looking at financial figures would not be a problem, but it was. There are no annual
reports or any estimates of the groups financial figures whatsoever, leading one to assume
the extent of the Bigios political ties.
With the presence of these oligopolies existing in Haiti, it is no wonder that lowest
10% of the population has an income of 0.7%
relative to the rest of the economy.
Wealth is not always everything, as seen from the
Bigio groups misuse of the spellcheck.
10
Martin Ibasco
EC102
Conclusion
Despite blatant problems with poverty, corruption, and inequality, Haiti is taking baby
steps in growing its economy. For one, the debt of Haiti is shrinking due to the help of the
IMF, freeing up government revenues to be focused on stimulating other parts of the economy such as healthcare. With a growing population and labor force together with incrementally rising GDP, Haitis economy has a positive future.
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Martin Ibasco
EC102
Sources
1. CIA. "CIA." The World Factbook. N.p., n.d. Web. 10 Apr. 2013.
<https://www.cia.gov/library/publications/the-world-factbook/geos/ha.html>.
2. "Haitians abroad sent $1.65 billion home last year| Reuters." Business & Financial News,
Breaking US & International News | Reuters.com. N.p., n.d. Web. 11 Apr. 2013.
<http://www.reuters.com/article/2007/03/06/idUSN06417841>.
3. "Important Dates in Haitian History." Black News, Opinion, Politics and Culture - The Root.
N.p., n.d. Web. 11 Apr. 2013.
<http://www.theroot.com/views/haiti-historical-timeline?page=0,1>.
4. "The World Bank DataBank." Explore . Create . Share. N.p., n.d. Web. 11 Apr. 2013.
<http://databank.worldbank.org/data/views/reports/chart.aspx#>.
5. Jay Zagorsky Lecture Slides
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