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Last Updated: Monday, 1 March, 2004, 15:23 GMT
Haiti: An economic basket-case
Analysis
By Steve Schifferes
BBC News Online economics reporter

Jean-Bertrand Aristide
Mr Aristide failed to tackle widespread poverty and corruption
Haiti is the poorest country in the Americas, and over the past two decades its economy has gone into a tailspin.

According to the World Bank, Haiti's economy has declined by an average of 0.2% per year during the 1980s, and shrunk by 0.4% per year in the 1990s.

The average per capita income is just $480 (300) a year, compared to some $33,550 in the United States.

As a result, even before the recent troubles, thousands of Haitians - especially the skilled and educated -

had attempted to migrate to the US.

Brain drain

And there was an exodus to Canada during the past couple of years.

Even people in their sixties have uprooted themselves "because the situation was unbearable," says Isabelle Mohaupt, a Haitian ex-investment banker who lives in London.

HAITI'S ECONOMY
GDP: $3.9bn
GDP per capita: $480
GDP growth: -1.7%
GDP per capita growth: -3.8%
Literacy: 50.8%
Life expectancy at birth: 49.1
Undernourished population 50%
Telephones/ 1000 people: 10
Doctors/100,000 people: 25
source: World Bank, UNDP
Radical ex-priest Jean-Bertrand Aristide was once a saviour to poor Haitians, whose protests helped restore him to power in 1994.

President Aristide, who has now fled the country, "came to power on his political skills, but when it came to getting the country going, he didn't have the skill or the will," says Mrs Mohaupt.

Although Aristide promised redistribution "all he did was talk", she says.

Pyramid investment schemes that collapsed ruining thousands of people were only real economic initiative of the Aristide years.

Haitians lost about $200m investing in these scams, known as 'co-operatives'; lured by promises of earning 10% interest, they sold cars and other valuables. The co-op founders acquired transport firms, hotels and petrol stations on the proceeds.

The co-ops crumbled in 2002, and took support for Mr Aristide with them.

Population boom

Poverty and desperation has fuelled the exodus from Haiti. In 2003, the US Coast Guard picked up 2,000 Haitian boat people trying to reach US shores, more than from any other Caribbean nation.

Unlike Cuban nationals, Haitian refugees are usually immediately deported if they come to the attention of the US immigration authorities - but many still try, often moving first to other islands like the Bahamas.

Haiti's economic problems are compounded by its fast-growing population, which increased from 5m to 8m in the past 20 years.

Over 40% of the population is under 14 years old, and adding to the high dependency ratio is the difficulty of producing enough food on a small land surface - the population density is 295 people-per-square-kilometre.

The country's main exports, coffee, mangos, and other agricultural products, have been affected by over-production by other poor countries and subsidies and trade barriers in rich countries.

A trade agreement with the United States, the Caribbean Basin initiative, had led to increase in manufacturing exports like clothing, but it has been partly superseded by attempts to entice the larger Central American nations into a free-trade bloc.

Corruption rife

Haiti's government has been highly dependent on foreign aid, receiving some $165m annually from the US, the EU, and the World Bank.

But after the 2000 elections, the US cut off aid, charging that some 70% of assistance found its way into the pockets of corrupt officials.

Haiti is a route for drug traffickers from Colombia to the US. Details of the trafficking have emerged during the Miami trial of drug baron Jacques Ketant, a godfather of Mr Aristide's younger daughter.

But the huge wealth gap between the impoverished Creole-speaking black majority and the French-speaking mulattos, 1% of whom own nearly half the country's wealth, remains unaddressed.

Furthermore, the country's infrastructure has almost completely collapsed and drug-trafficking has corrupted both the judicial system and the police force.

This has inhibited the development of tourism, which now makes up a substantial proportion of the income of the Dominican Republic, which shares the island of Hispaniola with Haiti.

In contrast, there is also no direct foreign investment in Haiti.

Some observers, including the development economist Jeffrey Sachs, have charged the Bush administration with deliberately cutting off aid to Mr Aristide, who was installed with the help of the US during Mr Clinton's presidency.

Human development

Haiti also ranks among the lowest in the Western hemisphere on measures of human development.

Only 50% of the population is literate, while more than half lack access to clean water or sanitation.

And 50% of population is under-nourished, with one in five children under-weight or under-height for their age.

But Haiti's biggest challenge is health.

It has the highest incidence of HIV/Aids in Latin America and the Caribbean, with 300,000 cases - some 4.5% of the population.

As a result, life expectancy at birth is below 50, while related diseases like TB are also spreading.

With its poor health care infrastructure, a substantial part of the population does not receive access to basic health care like immunizations against disease.

At the root of Haiti's problems has been a failure to tackle the poverty, social deprivation and inequality faced by most of its population.



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