Recalibration isn’t enough: post-earthquake developments in Haiti’s export manufacturing sector

ABSTRACT

Haiti’s international donors framed their post-earthquake interventions around the hopeful notion of “building back better”, an idea that suggests new ways of doing things. Yet, on matters of economic development, past models dominate. The government and international donors have made export assembly manufacturing, often referred to as sweatshops, a strategic pillar of the country’s strategy to combat poverty and drive economic recovery. Critics argue the model did not yield any significant reductions in poverty during the 1970s and 1980s, when it was at its peak. Supporters acknowledge these disappointing results but point to changes in the model and the global environment that promise better outcomes this time. This paper examines these changes, and recent modifications to the model, arguing that while they are not negligible, they are insufficient to make the industry into the poverty-reducing instrument its advocates would like it to be.

RÉSUMÉ

Après le tremblement de terre en Haiti, les bailleurs de fonds ont voulu structurer leur appui autour de la promesse de reconstruire mais en mieux suggérant ainsi l’idée de faire les choses autrement. Et pourtant, lorsqu’il s’agit de développement économique, les anciens modèles encore sont mis de l’avant. En effet, le gouvernement haïtien et les bailleurs de fonds ont fait de l’industrie textile d’assemblage (les Sweatshops) un des pilliers de leur stratégie pour aider le pays à lutter contre la pauvreté et le conduire à une reprise économique. Des économistes ont affirmé que ce modèle n’avait pas été concluant pour lutter contre la pauvreté durant les années 70-80. D’autres, tout en reconnaissant le peu de résultats positifs, ont souligné que des changements avaient été apportés au modèle et que, couplés à un nouvel environnement global, de meilleurs résultats pouvaient êtres attendus. Cet article analyze les changements et les récentes modifications apportées au modèle et tout en constatant qu’ils ne sont pas négligeables démontre qu’ils ne réussissent toutefois pas à transformer cette l’industrie en outil de réduction de la pauvreté tel que souhaité.

KEYWORDS:

• Haiti
• poverty reduction
• economic development
• assembly manufacturing
• minimum wage
• sweatshops

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. An earlier version of this paper was presented in Ottawa, at the “Canadian Political Science Association” Conference (May 2015). I wish to thank Pablo Heidrich, the panel’s discussant, for his careful reading of the manuscript and constructive suggestions.

2. Haiti is the poorest country in Latin America. The most recent household survey (2012) reveals 59% of its citizens live below the national poverty line of USD2.44 a day and 24% live below the extreme poverty line of USD1.24. Inequality is very high, with a Gini coefficient of 0.61, in 2012 (World Bank 2015).

3. Assembly firms import materials and equipment on a duty-free and tariff-free basis for assembly or manufacturing and then re-export the assembled product back to the originating country.

4. Export processing zones (EPZs) are areas in which firms produce goods mainly for export. To attract foreign capital, companies are usually exempt from taxes, customs, duty, and national labor regulations. The Caracol Industrial Park (CIP), which is discussed in detail, is considered an Integrated Economic Zone (IEZ), since resident firms can be domestically-oriented or export-oriented.

5. It reached its peak in 1986 with about 200 factories compared to 23 factories in 2012 (Interview with Marie-Louise Russo, Executive Director, Association des Industries d’Haïti [ADIH], Port-au-Prince, 25 April 2015).

6. Interview with Grégor Avril, Executive Director, Association des Industries d’Haïti (ADIH), Port-au-Prince, 27 October 2010.

7. Interview with Marie-Louise Russo, Executive Director of the Association des Industries d’Haïti (ADIH), Port-au-Prince, 23 April 2015.

8. The commission identified four areas that needed to be addressed to ensure the industry’s success: physical and institutional infrastructure, marketing, training, and product development.

9. Following the 2010 earthquake, the agency forgave Haiti’s USD484 million debt and pledged to provide all future aid in the form of grants rather than loans, at the rate of USD200 million a year from 2010 through to 2020.

10. Interview with Gilles Damais, Chief Operating Officer of IDB in Haiti, 21 April 2015.

11. For an account of the problems associated with the housing project see Luke (2015).

12. Sassine is the Director General of SONAPI (the Haitian government agency that oversees industrial parks), the former Executive Director of the Association of Haitian Industries, and current General Manager of the newly built Lafito Export Processing Zone. His views, therefore, can be assumed to reflect a broad cross-section of Haiti’s assembly factory owners.

13. This dollar amount, which is from D’sa (2016) was calculated at the exchange rate of HTG58.09 to USD1.

14. Both the 2013 Worker Rights Consortium and the 2014 Solidarity Center study used World Bank demographic data, basing their calculations on the assumption that the average apparel worker cares for two minors. The Worker Rights Consortium is a non-governmental labor rights organization that investigates working conditions in factories across the globe.

15. I am grateful to Pablo Heinrich for drawing my attention to this point.

16. Interviews for this paper were conducted with four focus groups: eight displaced farmers, 14 representatives from local non-governmental organizations and community groups, 13 workers from the industrial park, and 15 elected local officials and bureaucrats from surrounding communities. This fieldwork was carried out by Marylynn Steckley and Nixon Boumba. I would like to extend special thanks to Steckley for her careful translation of all focus group discussions.

17. Haiti has ratified all eight ILO core labor standards but informal work without contract still exists, remuneration is poor, and there is no social protection.

18. HOPE II defines internationally recognized worker rights as: the right of association; the right to organize and bargain collectively; a prohibition on the use of any form of forced or compulsory labor; a minimum age for employment of children; and acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.

19. This is not surprising given that in 2011 Wikileaks cables revealed Washington had pressured the GoH to reject an increase in the minimum wage for apparel workers. The embassy’s deputy chief of mission was quoted as saying the proposed wage hike “did not take economic reality into account” and was aimed at satisfying “the unemployed and underpaid masses” (CBS News 2011).

20. Interview with Yannick Étienne, Batay Ouvriye, Port-au-Prince, 5 November 2010.

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Yasmine Shamsie

Yasmine Shamsie is an associate professor in political science at Wilfrid Laurier University and a Fellow at the Center for Research on Latin America and the Caribbean, at York University. Her work focuses on democratic and economic development in the Caribbean Basin, with particular emphasis on Haiti.