Mixing cement at Petionville Club camp.

Mixing cement at Petionville Club camp. Photo by Peter Costantini.

Continued from Part 1.

Garments and gold

As Haiti slowly heals, foreign investors are responding to the government’s call. A number of in-progress and proposed projects are upping the ante in the debate over what kinds of development Haiti should pursue.

Two major prospects have made headlines over the past year. At a new industrial park in Caracol on the northern coast, a Korean garment manufacturer is promising 20,000 jobs and a Haitian paint producer has also announced plans to move in. Not far away, U.S. and Canadian mining companies are test drilling for potentially rich gold, silver and copper deposits across large areas of the northern mountains.

The Parc Industriel de Caracol project is being driven by funding from the U.S. Agency for International Development (USAID) and the Inter-American Development Bank (IDB), although the park will serve private companies. The mining projects are mainly foreign private-sector initiatives, but they have been facilitated by concessionary terms granted by the Haitian government that amount to an enormous subsidy.

The return of garment assembly and mining to Haiti is emblematic of reincorporation into the global economy.

“Globalization has ushered in a new model of capitalist accumulation in Latin America that has vastly restructured the region’s productive base, and along with it, transformed the class structure, the social fabric, political systems, and cultural and ideological practices,” according to William I. Robinson, Professor of Sociology at the University of California at Santa Barbara.

Haiti is now host to at least two of six “dynamic new activities” that dominate the region’s political economy, writes Robinson. Production has been reoriented towards “global markets with national industrial activity integrated into global production chains”. The spread across the region of maquiladoras (export assembly plants), is the most visible manifestation of this “industrial reconversion”. “A new round of extractive activity” has also been launched, notably “a vast expansion of mining operations and energy extraction to feed a voracious global economy”.

As Haiti transitions from recovery to a new stage of development or regression, these sorts of possibilities will likely present themselves more often. Haitians will have to make hard decisions about the kind of economy, society and environment they want for their country.

Haiti is not alone in this: other countries around Latin America and the rest of the developing world have come up with a variety of strategies for managing global investment and trade flows. Many have long experience with the garment industry and with mining. Haiti could potentially save itself a lot of grief by learning from them.

Mining and royalties

Mineral deposits frequently inflict a “resource curse” on countries that possess them, according to Joseph Stiglitz, former Chief Economist of the World Bank and Nobel winner. “On average, resource-rich countries have done even more poorly than countries without resources,” he writes. “They have grown more slowly, and with greater inequality …”.

Stiglitz offers a widely accepted analysis of the causes of, and well-known antidotes to, these economic poisons. He urges that governments of these countries “do more to ensure that their citizens get the full value of the resources” and use the revenues from them to promote development.

The agreements that Haiti has signed with North American mining companies reportedly provide unjustifiably low royalties to the Haitian government compared to most similar agreements made by other governments. Stiglitz stresses that many countries, including industrialized ones, have either renegotiated sweetheart deals or imposed a windfall profits tax on mining companies. He singles out Botswana, a small African nation, which since renegotiating contracts for diamond mining four decades ago has used the resulting income to build a more prosperous and equal society with a relatively democratic and transparent government. Other countries ranging from Bolivia and Venezuela to the U.S., Australia and Israel, he says, have also renegotiated accords or taxed mining firms.

Stiglitz also cites international civil-society groups such as Revenue Watch and the Extractive Industries Transparency Initiative that could provide guidance for Haiti on management of its mineral resources. Beyond these, environmental and labor groups in many countries can offer advice on dealing with the human and natural displacement and environmental hazards that are common by-products of mining.

Haiti’s government recently responded to criticisms on mining regulations. Prime Minister Laurent Lamothe told the Associated Press that within six months he hopes to propose a new mining law that will set royalty rates between 9 and 12 percent on mineral deposits that may be worth $20 billion. Haiti is consulting on mining policies with countries including South Africa, Chile and Peru, he said.

Whatever the benefits and pitfalls of resource extraction, it is unlikely to create many jobs for Haitians. And Haiti clearly needs huge numbers of jobs desperately. But if they do not pay a living wage and offer paths out of poverty, they may turn into a blind alley that traps workers.

Sewing and wages

When President Martelly recently visited the new SAE-A garment factory at Caracol, workers crowded around him to complain about wages of US$ 3.75 a day that they couldn’t survive on, according to the Port-au-Prince newspaper Le Nouvelliste. If the new industries don’t offer forward and backward linkages that mesh with related sectors of the local economy and enable firms and workers to move up the economic food chain, they risk trapping Haiti in global races to the bottom.

Nevertheless, the industrial park is already a rapidly growing fact on the ground. A second tenant, the Haitian paint manufacturer Peintures Caraïbes SA, signed an agreement to open a plant there that it said would create 400 jobs. And the IDB recently approved another $50 million for a second phase of construction of the park, out of a projected total of $180 million over six years.

To meet the projected demand for skilled labor, the Ministry of the Economy and Finance and the National Institute for Professional Training have reportedly begun short-term training programs for over 200 people in sewing machine operation and maintenance, seismically sound masonry, and processing of agricultural products.

This kind of training is a good start on enabling more Haitians to capture more of the value added by new development projects. To fully achieve this, though, it will be critical to extend it to much larger numbers from the bottom to the top of the economic ladder. In the countryside, literacy training and improved local education could enable some families to move beyond subsistence farming. At higher levels, ensuring that new industries hire Haitians will require
professional programs in fields such as mining engineering and industrial design. Fortuitously, a new campus of the Université d’État d’Haïti (State University of Haiti) funded by the Dominican Republic has just opened in Limonade, close to Caracol and the proposed mining zone. For businesses coming in to invest in the region, funding chairs or departments there in relevant fields would be a good way to demonstrate their commitment to Haiti’s long-term

Economics and democracy

Many of the principles needed to make development work in Haiti are officially recognized to a greater or lesser extent by the major players. But while aid for rebuilding is still flowing in, it is critical to involve all sectors of Haitian society in deciding the goals and modes of their country’s development. A few things are clear.

The Haitian government needs to bargain hard for the interests of the majority of its people. There is no excuse for the traditional back-room deals that benefit only factions of the economic elites.

Private investors and international donors, such as UN agencies, the IDB, and USAID, have to take responsibility for the long-term effects of their projects on sustainable development for the entire Haitian population and environment.

The Haitian diaspora sends large amounts of support back to their families and offers reserves of experience and know-how. It should be more closely involved in planning and further encouraged to re-invest and repatriate its human capital.

Both the government and foreign actors must bring Haitian grassroots organizations, such as peasant groups, labor unions and local governments, into these processes from the beginning. Haiti’s civil society is perhaps the most democratic and dynamic sector of national life, yet it is often excluded from the bargaining table.

A strategy for durable development would integrate all of these sectors into inclusive national development planning. Investments, especially foreign ones, would be coordinated with policies that channel them into achieving national goals.

Underlying these objectives are deeper imperatives: to incorporate the full costs of economic externalities into development initiatives; to develop internal markets and increase internal demand by raising cripplingly low incomes; and to foster the growth of human capital and capabilities in all Haitians.

Development, asserts Nobel-laureate economist Amartya Sen, depends on recognizing the agency of even the poorest people. Whether they are raising children in tent camps, selling in street markets, cleaning windshields at intersections, or plowing tiny plots of depleted soil, they are not “motionless patients”. Rather, they are active subjects, motivated by their own agendas, seeking to control and improve their own lives. Ultimately, as Sen observes, “Development can be seen … as a process of expanding the real freedoms that people enjoy.”

Note 1: I recently worked in Haiti for 5 months as an engineer on a wireless broadband Internet project for Inveneo. I had visited Haiti previously as a journalist and volunteer in 1995 and 2010. I’ve also covered Nicaragua, Mexico, migration and other topics for Inter Press Service over the past twenty years. For most of the past three decades I’ve made a living at Fortune 500 technology firms, including several years as a manager.

Note 2: The Caracol and gold mining stories were covered extensively in investigative reports by Haiti Grassroots Watch, a consortium including the online news outlet AlterPresse, Haitian university journalists, community radios and other local contributors. Jane Regan, Jacob Kushner and Ben Depp of the Pulitzer Center worked with them, and IPS has run their stories. Other Haitian news outlets, the New York Times, and the Miami Herald have also done substantial reporting on these issues.