Sources of Economic Growth and/or Development
Natural factors: the quality and/or quantity of land or raw materials (e.g. land, minerals, ocean). Improvement of quality and quantity of natural factors could lead to increase in economic output.
Human factors: the quality and/or quality of human resources. An increase in population will lead to an increase in labour force, which in return stimulates economic activity. An improvement in quality of labour (through education) could lead to an increase in efficiency, thus economic output.
Physical capital and technological factors: the quantity and/or quality of physical capital. When there is a large supply of capitals, there are many opportunities for labourers (job opportunities).
Institutional factors: Banking system, education system, health care, infrastructure and political stability. A country with stable institutional factors can attain a fixed level of growth. It also increases confidence of the economy and encourages the economy to grow/develop.
Haiti’s Statistics
Natural factors of Haiti
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Natural resources include bauxite, copper, calcium carbonate, gold, marble, hydropower.
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Climate is tropical and the terrain is mostly rough and mountainous.
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Lies in the middle of the hurricane belt and subject to severe storms from June to October – occasional flooding, earthquakes and draught cause damage to agriculture. (Haiti is very dependent on agriculture, so it means that their agriculture is unstable)
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Total percent of population drinking clean water: 58%
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Main industries: sugarcane, flour, cement.
Human Factors
- Life expectancy at birth - 51 years old (Short life expectancy is caused by the state of their living environment. For instance, only 58% of the population has access to clean water. This causes health problems, but 80% of the population is below the poverty line which means that they cannot afford health care. They are stick in a poverty cycle which makes it difficult to improve their standard of living)
- Infant mortality rate – 59.69 deaths/1000 live births
- Population below poverty line: 80%
Physical Capital and Technological Factors
- Labour force: 3.6 million (more than 2/3 of the labour force do not have formal jobs)
- Labour force: 66% Agriculture, 9% Industry, 25% Services (2/3 of Haitians depend on the agriculture sector such as small-scale farming and remain vulnerable to damage from frequent natural disasters caused by the country’s widespread deforestation.)
Institutional Factors
- Politically instable – “Haiti has been plagued by political violence for most of its history.” (Political Instability slows Haiti from attaining economic growth)
- Literacy rate – 52.9%
- Education expenditures – 1.4% of GDP (The extremely low expenditure on education explains why the literacy is very low. If the government was to increase spending on education, it is likely that the literacy rate will improve.)
Overview of Haiti’s Economy
- Inflation: 15.5% (Suffers from a high inflation, a lack of investment because of insecurity and limited resources and a severe trade deficit.)
- Government relies on formal international economic assistance for fiscal sustainability. (This decreases economic confidence and makes Haiti heavily dependent on other countries. It is difficult to achieve economic growth when Haiti is very dependeent on other countries.)
- GDP: $11.29 billion
- GDP Per Capita: $1900
- GNI Per Capita (US$): 560
- Current Account Balnce: -$611 million (2008) (meaning it is is a current account deficit. The sum of the deficit is large so it is a serious issue. Furthermore, since Haiti is not achieving large economic growth, the deficit is unlikely to show positive economic growth. It reflects Haiti’s weak economic output and dependency on foreign countries)
- Exports – $490 million
- Imports - $2.107 billion
Evaluation
Haiti is the second-poorest country in the Western Hemisphere. It relies heavily on its primary sector (agriclture and farming) Haiti is in a current account deficit because its imports outweights exports. At the moment, Haiti’s biggest challenge is their dependency on agriculture. 66% on the economy depends on agriculture but Haiti is prone to natural disasters. This means that their overall economic output changes depending on the weather. This causes the Haiti economy to be very unstable. In order to sustain a constant growth, they need to strengthen other sectors of the economy (such as the Industry and Services).
Furthermore, a 7.0 magnitude hit Haiti on January 12th 2010. From this, Haiti’s biggest challenge at the moment is reconstruction of the city and helping citizens. The health care system requires support as well. Haiti is the poorest country in the Western Hemisphere, ranked 159th of 182 countries on the Human Development Index. Therefore the government budget is tight and the country is considered “economically vulnerable”. Therefore it requires help to recover from the earthquake. (Aid will be further discussed in the following blog posts)
Although Haiti’s statistic seems hopeless, Haiti’s source of growth that has the largest potential is human factors. Despite the slow growth rates, Haiti is one of the most densely populated countries in the world. There is plenty of labour that is availabe, so if the economy is stimulated in a way that demand for labourers increase, the economy has the potential of growing. When the demand for workers increase, it means that more households will gain income. When employment increases, more disposable income could be spent in the market. This stimulates economic growth since there is more money in the economy. In addition, from the recent earthquake we can see that Haiti’s people are strong willed to recover. From this, the economy can expect determined workers with lots of potential. The determination of a group of workers could largely change the level of production. If Haiti has more capital, an increase in job opportunities could lead to economic growth.
Source: http://www.unicef.org/infobycountry/haiti_statistics.html
https://www.cia.gov/library/publications/the-world-factbook/geos/ha.html
http://www.nationsencyclopedia.com/economies/Americas/Haiti.html
