IMPROVING PROSPECTS FOR HAITI ’ S PLACE IN THE GLOBAL ECONOMY: A Radical Agenda? Christopher LINGLE, PhD Universidad Francisco Marroquín — Guatemala Centre for Civil Society — New Delhi CLingle@ufm.edu AmCham — Haiti 10 September 2013
Path to Prosperity: East Asia • High-growth economies did not depend upon aid • Economic goals tended to drive political agenda – Leaders accepted that globalization offered net benefits • Mixed record on corruption • Effective mobilization of financial capital – Japan, Korea & Taiwan relied on domestic saving – Hong Kong, Singapore, etc. used international financing • Investments in human capital followed growth • Economic & politic logic of dominant (export-led) growth model shows diminishing returns – Bubbles & booms followed by “ busts ”
Haiti ’ s Economic Future • Haiti controls own economic destiny – Choose policies so domestic investment can thrive – Root out causes of local cost disadvantages • Most expensive energy in region • Most expensive ports in region • Poor physical infrastructure – Lower burdens of domestic policy • Reduce compliance cost of regulation • Remove distortion effects of (indirect) taxation • Lower tax burden by reducing public-sector spending • Opportunity to have world ’ s 1 st “ Start-up City ” ! – www.startupcities.org
Redirecting Economic Policy Debate • Economic growth versus income/wealth redistribution – Rising living standards depend on economic growth • Increased trade & capital formation “ positive-sum ” outcomes – Perils of aid dependency ( “ good intentions; bad results ” ) • Reinforces “ negative-sum ” mentality & envy redistribution • More international agencies more government involvement that diverts valuable, scarce resources from private production • Correct “ institutional infrastructure ” capital formation – “ Rule of law ” & depoliticization of life outcomes • Secure individual freedoms & private property rights – Less arbitrary tax, judicial and police system with less corruption – Reduce burden & distorting effects of tax system • Less bureaucracy fewer opportunities for corruption • Privatize government-owned property by giving it away! – Privatized property becomes activated & added to tax rolls – Revenue from sales LEAST important aspect of privatization
Policy Choices to Support Prosperity • Trade & capital formation more wealth, jobs & income – Increase foreign & domestic competition • Entrepreneurs are engine of growth (rational use of capital) • Governments do NOT create jobs — policy interventions can allow them to be created or destroy them • Policies for Economic Growth Without Populism – Give government land & deeds to relocated squatters – Lower tariffs raise living standard for all consumers, especially the poor – Extend free-trade areas to logical limit: ALL OF HAITI! – Reduce sales taxes (IVA) – Address petty corruption to involve police & jails – Require current & former government officials to explain source of assets & compare against reported income • “ It ’ s the (micro) economy, stupid! ”
Increasing Economic Opportunities • Make it easier to open small businesses – Recognize that poor people can be best entrepreneurs • Eliminate economic privileges that keep prices high • Land reform – Facilitate land titles & grant private subsoil mineral rights – Give squatters government land & privatize other properties • Reform educational system – Education not necessary or sufficient for economic growth • Growth must occur so communities can afford to pay for education – Privatize all schools or encourage competition – Restrict public education spending to primary schools • Improve investment climate capital formation
Net Benefits from Globalization for Haiti • Learn from Asia ’ s economic “ tigers ” & “ dragons ” – Get over “ Gringo-phobia ” & increase openness to FDI – More Free trade & better environment for capital • How to expand gains from globalization – Evaluate impact of international agencies & NGOs – Improve “ Doing Business ” scores (World Bank report) • Look to regional partners (Brazil or Mexico)
Startup Cities • Communities based on legal & political reform – Create environment for progressive development of institutional reform (no predetermined “ correct ” answers) • Cooperative residential association & for-profit corporation • Progress within competitive environment to eliminate “ bad ” institutions – Policy decision to allow special jurisdictions to create inclusive economic growth, combat corruption & insecurity – More transparent, better public services & environmental oversight – Expand role of private sector & shrinking role of government (more merit/less politics) • Experiments: Sandy Springs (www.mackinac.org/18634) • Contracting out ALL municipal services
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