OP-ED: Building Haiti's Economy, One Mango at a Time, By PAUL COLLIER and JEAN-LOUIS WARNHOLZ, New York Times, January 28, 2010
A column I've been waiting to read, from a source I truly respect. A great opening:
IN an astonishing outpouring of generosity, nearly half of American households have donated money to help Haiti recover from the recent earthquake. The United States government and other governments around the world, for their part, have sent thousands of relief workers and have pledged $1 billion so far. But Haitians need something more fundamental than relief from the present situation; they need jobs that they can count on for years ahead. For this, the private business sector is essential. Luckily, business leaders are meeting now in Davos, Switzerland, and Haiti is prominent on their agenda.
Haiti is by far the poorest country in the Western Hemisphere, and yet it need not be so, because unexploited economic opportunities abound there. Some of the best mangoes in the world grow in Haiti -- though too many of them rot, offshore from the world's largest market, for want of adequate roads and well-governed ports. Excellent coffee is grown in the Haitian mountains, but much of it is sold informally across the border to coffee producers in the Dominican Republic, who reap most of the profits.
Even better for my eldest, there's a Johnny Depp angle(!):
Haiti also has many qualities attractive to tourists: a warm climate; magnificent white-sand beaches and turquoise water; Tortuga, the famous pirate island off the northern coast; and the Citadel, a mountain fortress erected after Haiti's independence in the early 19th century to fend off colonial powers, now a World Heritage site. Still, it is one of the least visited places in the Caribbean.
I can see the Disney resort already.
More seriously:
The Hope II trade pact with the United States, signed in 2008, granted Haiti duty-free access to the American apparel market for the next decade. Already, as a result of the deal, many garment factories situated along Haiti's eastern border (so as to use Dominican electricity and ports) have become profitable and competitive with Chinese garment makers. But light manufacturing could be much bigger in Haiti -- if the Haitian government and donors would credibly commit to providing functioning roads, electrical grids and ports, and if outside private capital would invest, patiently, in Haitian businesses.
Finally, the more sensible and realistic visions emerge.
And now, to the nitty-gritty, as we discovered in Kurdistan:
So, production costs are high because there are too few investors, and there are too few investors because costs are so high.
The way to address this chicken-and-egg problem is for individual private investors to coordinate with one another. This would not be a new strategy; in the 19th century, the American West was developed not as a process of gradual diffusion but in spasms of local investment booms, financed by enthusiastic outsiders. The earthquake could usher in such a boom in Haiti.
The key is setting up the sort of thing we ended up doing for the Kurds: a quasi-investment bank that works that coordination angle, keeping in mind the logical rule-chaining (if you want X, you need to set up Y first, etc.)
(Via WPR's Media Roundup)
Wednesday, February 3, 2010 at 10:59PM 
