Alisa Kawashita
Haiti’s Earthquake and its Economy
The world was shocked when 7.0 magnitude earthquake struck Haiti and
completely destroyed its capital city Port-au-prince and nearby areas in 2010.
While Haiti was already the poorest country in the western hemisphere, its
economy was finally starting to grow partly because of the Haitian Hemispheric
Opportunity through Partnership Encouragement (HOPE) Act. Haiti was able to
increase its apparel imports and investment to the United States. The earthquake
impacted the country’s economy greatly, as statistics (indicators) indicate
including GDP growth rate, work force percentages, as well as its debts.
First of all, the Gross Domestic Product of the country decreased by 5.1%
after the earthquake. The trend of the GDP growth in Haiti before the earthquake
was growing steadily, although there was a slight drop at 2008, which is when a
tropical storm hit the country. The growth rate of 1.5% in 2006 was the highest
growth rate since 1990.
Shifts in GDP Growth Rate in Haiti
4
Real growth rate: GDP (%)
3
2
1
2006, 1.5
0
2006
-1
-2
-3
2009, 2.9
2007, 2.3
2008, 0.8
2007
2008
2010
Tropical
Storm
Earthquake
-4
-5
-6
2009
2010, -5.1
Year
One of the reasons why it experienced such a setback in its GDP was not
only because its capital city and infrastructure was ruined. Haiti depends heavily
on agriculture, as 2/3 of its labor force is from the agricultural sector. Although
the agricultural sector takes up 2/3 of the labor force, it is only 25% or 1/4 of
the GDP according to the CIA factbook.
Labor Force- by occupation
services
9%
industry
25%
agriculture
66%
GDP- composition by sector
agriculture
25%
services
59%
industry
16%
From this statistic, we can conclude that Haiti is indeed a LEDC (Less
Economically Developed Country) since it does not have the technology to create
crops that can be produced efficiently. Countries with larger service sectors are
usually MEDCs (More Economically Developed Countries). Because there are
frequent natural disasters, (Tropical storm, 2008 and Earthquake 2010 are
examples) Haiti should depend less on agriculture. As shown in the graphs,
service jobs have better pay. Haiti should work towards creating more jobs in the
service sector. In addition, Haiti should work to create larger farms, since most
are individual, small-scale farms, which are more vulnerable to earthquakes and
storms. It should learn agriculture technology from other countries while they
are still interested in trying to help Haiti recover from the earthquake. Haiti
could use the earthquake as a spring to start over and build new infrastructure,
create a larger service sector- which will provide people with more jobs, learn
technology from other countries. This could be the first step to a successful
recovery of its economy.
Haiti’s external debt was massive as it summed up to 1.362 billion in
2009, according to the CIA factbook. Despite the occurrence of the earthquake in
2010, the debt reduces to 504.1 million.
Haiti's External Debt
Debt (Millions of Dollars)
1600
1400
1200
1000
800
600
400
200
0
2007
2008
2009
2010
Year
While other statistics indicated a negative effect from the earthquake- this
indicator shows improvement. This is an anomaly, a data trend of pattern that
does not fit. It turns out that after the earthquake, Haiti received forgiveness for
more than 1 billion dollars of its debt from donor countries.
Haiti needs serious work to recover fully from the earthquake. It needs
aid from other countries, and create service related jobs that have better pay for
its young force, since the unemployment rate is over 40% of the population.
Haiti’s devastating earthquake caused a major setback in its economy, but it
could use the earthquake as a spring to recover.
References
Amadeo, K. (2012, January 26). Impact of Haiti earthquake on economy. In US economy.
Retrieved from http://useconomy.about.com/od/criticalssues/a/Haiti_earthquake.htm
Haiti. (2011). Countries of the world. Retrieved from http://www.theodora.com/wfbcurrent/
haiti/index.html
Haiti. (2011, November 10). CIA factbook . Retrieved from https://www.cia.gov/library/
publications/the-world-factbook/geos/ha.html
Morgan, S. (n.d.). The Haitian earthquake economic aftershocks. In Smartmoney. Retrieved
from http://www.smartmoney.com/invest/markets/the-haitian-earthquakes-economicaftershocks/?zone=intromessage