IMPROVING PROSPECTS FOR HAITI S PLACE IN THE GLOBAL ECONOMY: A - - PowerPoint PPT Presentation

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 1st “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

• versight

– 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