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Growth of GDP in Haiti

There is empirical evidence to suggest that, within the last three years, the rate of growth of the GDP in Haiti has trailed the rate of growth of GDP of many other countries in the Caribbean Basin. It is often argued that the lag is due to three main factors:

  • A lack of financial infrastructure to attract capital.
  • Insufficient capital investment per worker.
  • Inadequate and underutilization of human capital.

Question of Financial Infrastructure

The lack of financial infrastructure is reflected directly in the level of GDP produced in Haiti, and it is best seen when GDP in Haiti is compared to the GDP of other countries in the Caribbean region.

It is argued in most of the development literature, increasing GDP necessarily requires the flow of foreign direct investment. Foreign direct investment does not just happen. It generally goes to countries where there exists a reliable financial infrastructure.

There is ample evidence that the Dominican Republic, Jamaica, and Trinidad all enjoy on an annual basis a large inflow of foreign capital. This is best reflected in the level of the national debt of the countries.

GDP Growth & Economic Resources

In addition to financial infrastructure and foreign direct investment, GDP growth is also a function of how available economic resources are allocated in the production of output. The Bureau of Statistics from the International Monetary Fund (IMF), the World Bank, and "The Economist" agree that in Haiti, the population is estimated to be about 8.5 million people with a labor force of about 1.6 million and GDP for the fiscal year of 2004 - 2005 of about 3.8 billion, hence on average $350 per capita. Given a labor force estimated at 1.6 million workers (3.8 billion/1.6 million), the estimated GDP per worker is, on average, about $2,375. If we assume a standard minimum rate of net profit of 40% per worker, the aggregate profit realized in the Haitian economy is at a minimum of about $1.5 billion. Given the aggregate GDP of $3.8 billion in 2005 and an aggregate profit of $1.5 billion, the cost of producing the total GDP in Haiti is about $2.5 billion.

With GDP per worker of about $2,375 and resources allocated per worker of about $1,437, it is evident that the average capital invested per worker in Haiti represents another crack in the ability of the country to grow. This crack is best captured as we compare the resources per worker in Haiti with the resources per worker in other countries of the Caribbean region.


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