It is well recognized by economists that trade liberalization brings both costs and benefits.
Benefits should include: large exports of goods which have a comparative advantage; access
to cheaper imported goods and more product variety for consumers; and local producers and
businesses being spurred on to become more efficient and innovative due to increased
competition.
The expected costs of liberalization are: some domestic producers and businesses losing out
because of increased competition; macroeconomic stability suffering if imports increase but
exports do not; and government revenues declining through the loss of trade taxes.
97
Any
instance of trade liberalization will have winners and losers.
In the case of Haiti, it is possible
to construct a `balance sheet' of the gains and losses from trade liberalization, which we have
done here.
Gains
Exporters
It is very difficult to sustain the argument that Haitian businesses have experienced an
increase in their exports; traditional agricultural exports, such as coffee and mangoes, have
been consistently falling since 1995 (see table 2).
While the dollar value of manufactured
exports more than trebled between 1996 and 2003 (see table 2) many of these exports
consist of a high proportion of imported inputs, meaning the value added locally is extremely
limited.
Total net exports have risen little, if at all.
Traders
There have, however, been gains for businesses that have become involved in importing.
Liberalization brought with it the sudden appearance of many import companies.
Some were
existing companies previously involved in national production (such as sugar), while others
were quickly created to take advantage of the new opening.
On the whole, the approach to liberalization in Haiti was very opportunistic.
Importing cheap
produce from the US was seen as easy money for many of Haiti's established families and
members of the business community.
Many businesses, therefore, got involved in an
improvised fashion, often without much knowledge of the sector or product.
In a sector such
as chicken there were originally around 25 companies operating including, for example, a
finance minister in the Preval government.
Even President Aristide, in his private capacity, got
involved in the import trade, in the rice sector.
Although a number of companies were created,
many of these later withdrew from the trade as it became more difficult.
The consequent
concentration of market power has enabled import traders to appropriate the gains from tariff
lowering.
It is also highly likely that little of the money made by importers stayed within Haiti.
Many of
the earnings of the Haitian elite are transferred to the US or to offshore banks, into savings
accounts or overseas investments.
Money actually spent by the elite within Haiti is also
unlikely to go on domestically produced goods, but spent instead on luxury imported goods.
Therefore, apart from the importers' gain, the sum total of benefits, in terms of job creation
and purchasing power in the local economy, is small and of little interest to anyone looking at
economic development or the gains to the poor population in Haiti.
Posted by Lionne on 4/24/08 7:26 PM
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