Root Cause of Problems in Haiti:GROWTH 3

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Growth

Haiti's economy has been stagnant and declining for many years, with the country gripped in a
severe economic crisis.

It is the only country in the region where gross domestic product
(GDP) per person has been consistently declining ­ at a rate of two per cent a year for 23
years.

18

The 1991 coup, which resulted in Aristide's flight into exile, led to an economic and political
embargo on Haiti which had extremely negative economic consequences.

Aid was cut off, and
the UN Security Council imposed a trade ban with Haiti.

During those years, real GDP fell by
close to 25 per cent, inflation rose, activity in the export-oriented textile industries virtually
ceased, tax collection broke down and the maintenance of economic and social infrastructure
was all but abandoned.

19

In 1994 the US led military intervention in Haiti secured the return of Aristide from exile and
was followed by elections giving power to René Preval.

Preval represented a pro-Aristide
coalition made up of Organisation Politique Lavalas (OPL) and three other small parties.

Exports of manufactured goods recovered slightly when the embargo was lifted, but the
economy showed a steady decline between 1995 and 2000 and real GDP did not grow at all
between 2000 and 2003.
20
Economic conditions deteriorated further in 2004.

The following table structure reveals the way in which the economy has evolved:

Table 1
Structure of the economy
1994
2003
2004
Agriculture
34.7% 27.9% 26.9%
Industry
22.5% 17.0% 15.9%
Services
42.9% 55.1% 57.1%
Source: World Bank
21
Although the rural sector is still home to the majority of the population, the contribution of
agriculture to Haiti's GDP has been in steady decline.

At the same time the share of services
is increasing, implying a shift from agriculture into the urban-based informal economy.

Lionne, April 24 2008, 6:19 PM

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