How to get Haiti’s economy going again

Marketplace Staff Feb 3, 2010

How to get Haiti’s economy going again

Marketplace Staff Feb 3, 2010


Kai Ryssdal: George Mason University economist Tyler Cowen makes no secret of his feelings about Haiti — both the country and its people.

TYLER COWEN: To me it’s one of the places where there is some essential soul of humanity, stronger than almost any other place I’ve been.

He’s been there a number of times. He collects Haitian art and music. And thanks to a background in development economics, Cowen has become a student of Haiti’s problems. The earthquake a couple of weeks ago has gotten him thinking and blogging about what to do now. How to get some kind of new economy going again. When we talked, before we got to that part, I asked him to put the old Haitian economy into context.

COWEN: Haiti is a much poorer country than most people realize. But you have a country where there are very few recognizable brands. The Holiday Inn had closed down. McDonald’s had pulled out. Most of it is subsistence economy.

Ryssdal: Remittances and foreign aid, right? Remittances from overseas workers.

COWEN: Remittances are about a quarter of Gross National Product. And without remittances the place would collapse. There aren’t that many large-scale structures. Most of civil society has been destroyed. A lot of the Haitian poor, they actually eat mud cakes for nutrition. So if a catastrophe comes along, the amount of slack there is very, very thin.

Ryssdal: As we start to think about rebuilding Haiti physically, but also rebuilding its economy, what do we do? Where do we go?

COWEN: Well, I wouldn’t call it rebuilding, I would call it building. I think the first thing we need to do is to take in more Haitians in as many wealthy countries as possible. It’s simply not possible to support the number of people in Haiti right now. There’s no way to do it, no matter how well any aid program will go. So taking more immigrants also means more remittances. The next thing we need to do is attend to problems of sanitation. And also worry about the Haitian planting season, which is due to start this spring. And that requires seed, fertilizer, a lot of infrastructure that tends to come through Port-au-Prince. And if the planting season doesn’t get underway that’s about half of their food supply.

Ryssdal: What has to happen first, though, Tyler?

COWEN: I would say get some secure tents for people to live in, so that when the next rain comes it’s not all washed away. Vaccinate children and attend to sanitation. You have several hundred thousand people living in a way where there’s nowhere to put their waste, and for the first few days maybe that’s manageable, but after three months, it’s not.

Ryssdal: You’ve done some work in development economics. And I’m curious as to your thoughts on how all of this is supposed to happen. What is the mechanism by which any of this — whether it’s secure tents or waste treatment systems — how is that going to work, how is it physically going to happen?

COWEN: In the longer run, development has to happen locally, it has to come from Haitians. But I would say in the short run, some of the emergencies need to be addressed really by the U.S. military, by the U.N. and by the Inter-American Development Bank. But if Haiti is to succeed in the longer run, it’s not going to be up to anything we do, it will require a collective decision from the Haitians, really, simply that things are going to be different.

Ryssdal: Haiti is a place that has a history of corruption, at least in modern times. How do we think about that as we try to get huge amounts of money and material in there?

COWEN: I think Haiti will remain corrupt for the foreseeable future. But there are two kinds of corruption. One kind of corruption is where you shut out the outside world because it’s a threat to you. Another kind of corruption is you let the outside world in because you can take a piece of the pie. If Haiti moves to that second mode of corruption, which is a lot like how China works or how South Korea worked in the 70s, that’s actually the scenario for hope. If our vision is to drive all corruption from Haiti that’s unrealistic. What we need is a Haiti that is more commercial, more outward looking, and more open to the rest of the world.

Ryssdal: It seems like a lot of things have to go right for things to work out well for Haiti.

COWEN: A lot of things have to go right, but Haiti has some remarkable assets, most of all its people, their creativity, potential for tourism, and Haitian reputation for good, hard work, so I’m cautiously optimistic about the medium run.

Ryssdal: Tyler Cowen is a professor of economics at George Mason University. He blogs at a site called Marginal Revolution. Tyler, thanks a lot.

COWEN: Thank you.

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