Quake crushes Haiti’s economic revival

Decades of political upheaval that thwarted economic development in Haiti began giving way last year to a semblance of stability. But a push to promote jobs in industries like garment manufacturing was dealt a serious blow by this week's devastating earthquake.
By John W. Schoen
Senior producer
msnbc.com
updated 8:01 a.m. ET Jan. 15, 2010


John W. Schoen
Senior producer
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This is an especially cruel moment for the people of Haiti.

After decades of political corruption, civil unrest and massive unemployment, the tiny, impoverished country was just recently enjoying a small measure of stability. A series of public and private initiatives had spurred hope that economic development might finally end the misery of millions of people living on less than two dollars a day.

But the massive earthquake that flattened Haiti’s capital, left millions homeless and killed an estimated 50,000 also crushed hopes that the Western hemisphere’s poorest nation was beginning to dig itself out of abject poverty.

"Since about 2004 there had been a determination by the United Nations and by the international community in general that they were going to make a sustained effort at trying to develop Haiti as a functioning state and as a functioning economy,” said Peter DeShazo, director of the Americas Program at the Center for Strategic and International Studies. “This, of course, sets back the entire Haitian economy."

It may be some time before the longer-term impact on Haiti’s efforts to bootstrap its economy can be known. Officials are still struggling to develop estimates of loss of life and infrastructure damage. In the short term, the local economy likely will see a boost from a flood of international aid, including humanitarian relief and infrastructure reconstruction. But it is not at all clear that those efforts will translate into a lasting foundation for a economic development.

"There is going to be abundant capital to grow,” said Rafael Amiel, managing director for Latin America and the Caribbean at IHS Global Insight, a research firm. “How they handle that is the key question. This can jump-start a very good thing, because there’s going to be money. But usually small economies are very bad at spending money. “

The job of developing Haiti’s economy — less than half as big as Vermont's — is daunting. Two-thirds of its 9 million people are unemployed. Public education is not widely available. Infrastructure, health and social services are often worse than in sub-Saharan Africa, according to the World Bank. Severe deforestation has crippled the agricultural economy and left the country's residents vulnerable to hurricanes, floods and landslides.

As it has struggled to pull itself out of poverty, Haiti has sustained numerous blows in recent years. In May 2004, three days of heavy rains and floods killed more than 2,600. Later that year, Tropical Storm Jeanne brought floods and landslides killing 1,900 and leaving 200,000 homeless. In 2008, three hurricanes and a tropical storm killed some 800, devastated crops and caused $1 billion in damage.