Haiti - Current economic position and prospects (Vol. 1 of 2) : Main report

cS Report No. 2165-HA P.%rE VW T v I fI.% I r- 1 U rIN I %.j. Cu irrent Ern,nn,mir Pn,citirn ,nA InrPFP TS Fc;TI %_u-o tA X I %t IU^ I L 1 I 1 JI I I %- 1 .1 -.r _,, I CA I %.A- rluspecLS ui rfldILI ONE WEEK (in Two Volumes) %/,,. .p 1. IkA,;v QpD . 11F aN mm _, vuiuiiic: 1. lviaiii rxW[JIL 21"i P 'IL D\ December 22, 1978 l wU X Latin America and the Caribbean Country Programs I nfD rFIlAl I ICIF AJl V . .*t ,. . ~._.. . *. Document of the World Bank This document has a restricted distiibution and may be used by recipients only in the nerformance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ABBREVIATIONS BCA Bureau de Credit Agricole BHPI Bureau Haitien de Promotion Industrielle BNRH Banque Nationale de la Republique d'Haiti CONADEP Conseil National de Developpement et de Planificacion (since Nov. 78: Secretairerie d'Etat du Plan) DARNDR Departement de l'Agriculture, des Resources Naturelles et du Developpement Rural DFC Development Finance Company IDAI Institut de Developpement Agricole et Industriel IHPCADE Institut Haitien de Promotion du Cafe et des Denrees d'Exportation IICA Instituto Interamericano de Ciencias Agricolas SEN Societe d'Equipement National CURRENCY EQUIVALENT Currency Unit = Goiirde (G) US$1 = G 5.00 G I = I TOA9 0f L.ote: nll fLLgures refLer to the Lscal Ylear ending Septemb er JV.  FOR OFFICIAL USE ONLY This report is based on the findings of an economic mission, which visited Haiti in January/February 1978. The mission was led by Ulrich Thumm and included the following members: Caroline Doggart (consultant, industriai sector, public investment), Nevin Fahmy (external debt), Dominique Hachette (consultant, balance of payments, money, banking), and John Pelissier (agricultural sector). A report summarizing the mission's preliminary findings was discussed with the authorities in June 1978, and an earlier draft of this report was discussed in November 1978. This document has a restricted distribution and may be used by recipients only in the performance of their offi.ca! duties. Its conntents may not otherwise be disclosed without World Bank authorization. -- -- -J~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~   - i- Current Economic Position and Prospects of Haiti Volume I: Main Report Table of Contents Page No. COUNTRY DATA MAP SUMMARY AND CONCLUSIONS .............................. i OVERALL ECONOMIC PERFORMANCE .......................... 1 A. Aggregate production and demand I...... ........... 1 B. Balance of payments ............. ........... ...... 3 C. Public finaince ............ *.................................... 4 D. Money, credit, and prices ............ . ........... 6 SECTORAL DEVELOPMENT AND ISSUES ....................... 9 A. Agriculture ...................................... ........... 9 Production trends ................................ 9 Technical constraints ... . ...... . . . . . . . . . .......... . 11 Institutionial constraints == =., 12 Marketing and prices ........................................... 13 Recommendations for agricultural policy , 17 B. Industry .1...... 9 Produuctior. trend ar.d structure .......................... , 9 Investment .................... ................... 22 Employment and wages .... ....... ........ , ,,, 22 Assessment of industrialization ............ .... 24 Constraints ............. ......................... 26 Recommendat:ions for future industrial development 28 C. Banking ........................................... 30 D. External Sector ....... .. ...... ............. 32 Main trends; ................................................ 32 Structure of exports . ........... ..... ............ 32 Structure of imports ............................. 36 Financing of balance of goods and services ....... J9 Major weaknesses .... . ............................ 40 E. Public Sector ................. . ........... ....... 41 Financial issues ......... ..... .................. 41 Institutional issues .......... ..... . .......... 43 Recommended policy measures .. .................... 45  Table of Contents (Continued) Page No. III. SOCIAL AND SPATIAL ASPECTS OF DEVELOPMENT ............. 48 A. Population and employment .# ...................... 48 Size, growth, and structure ...................... 48 Regional structure and migration ................. 50 Population policy ................. ....... 52 Population projections ..... ...................... 53 Employment ................ .................................. 54 B. Spatial imbalances . ................... .... ....... 55 Spatial pattern of population and economic activities .............................. 55 Impact of government policies .................... 56 New spatial strategy ........ . . . .............................. . 58 C. Income distribution and poverty .................. 59 Inter-regional income distribution .. ............. 59 Inter-personal income distribution .............. . 61 Incidence of absolute poverty .................... 63 IV. PROSPECTS FOR FUTURE DEVELOPMENT ...................... 64 A. Orientation of long-term development .... .......... 64 Government goals ........ . ...... ........................ 64 Constraints , ...... . ....... 65 Policy recommendations ........................... 66 B. Long-term growth projections ..................... 68 Scenario I ................................................. 69 ScenarJio II' . .. .. .. .. . .... . . . . . . . . . . . . . . . . . . . .I. 70 Annex I - Regional Resource Base and Development Potential .... 75 II - Situation and Prospects for Main Crops and Other Primary Sector Activities ..... .................... 83 iII - Selected Industrial Project ideas ................. 9i IV - Implementation Problems of Selected Development Projects .......................................... 94  Table of Contents (Continued) Page No. Text Tables I GDP and GDP Growth by Sector ........ . ........ . 1 2 GDY and GDY Growth by Demand Components, 1970-77 ....... 2 3 Summary Balance of Payments, 1970-77 ...00.00.....6* 4 4 Government Revenues and Expenditures, 1972-77. 5 5 Summary Public Sector Accounts, 1972-77 ... ........... 6 6 Change of Money Supply, GDP, and Prices, 1971-77 ..... o. 7 7 Extension of Credits of the Banking System, 1970-77 8 8 Domestic and International Prices, 1960-77 .....o ... o 9 9 Average Yields of Selected Crops .. ....... ...&..&.& . 10 10 Monthly Index of Grain Prices at Port-au-Prince ..... 15 11 Inter-regional Price Differentials for Maize and Beans . 15 12 Yearly Index of Grain Prices at Port-au-Prince, 1968-78. 16 13 International and Domestic Grain Prices, 1974-78 ... 16 14 Comparative Le,vels of Industrialization, Haiti and Selected Latin American Countries, 1976 ..... ......... 19 15 Distribution of Net Value Added bv the Modern Industrial Sector, 1976 .....*.oo ........o .....o 24 16 Expenditures on Gross Value Added by the Modern Industrial Sector, 1976 .o ............................. 26 17 Summary Net Exports, 17 10974, a.d !977 asaosaviAs- 33 18 Exports, Imports and Value Added of the Assembly A.dustries,~ 197=7 o.*............................ .............. 35 19 Summary Net Mechandise Imports, 1970-76 ....... o .... . 37 20 Est'mrate o'L Nor,-Esser.;ial Im-ports, 109714=76 .*v@@* .39.o .. 21 Population by Age and Sex, 1950 and 1971 ..o.......... 50 22 Net Migration (Lnternal ndu Elxternalj uy epartment, 1j973 51 23 Spatial Distribution of Public Investment, Population and National Income .* ... ...... . .. . .... ... ...*.o 59. 24 Average National Income per Capita by Region .60 25 Distribution of National income by Income Classes, 1976. 61 26 Per Capita Incomes and Relative Poverty by Regions, 1976 62 27 Balance-of-Payments Projection, Scenarios I and II, 1977, 1983, and 1990 ..71 28 Export and Import Projection, Scenarios and II, i977, 1983, and 19-90 - - o - .. . - -. . .. o. . .. 72 29 Projection of Main Economic Variables, Scenarios i and II, 1977, 1933 and 1990 --..........o...... .. 73   Pae. I of 2 COIYNRY DATA- HAITI AREA POPULATIODN DENSITY 27,700 sq ko 4.7 million (moid 1976) 168 per sq kmu FLate of growth 1.6 t (true 1971 to 1976) 393 per sq ho of cultivated land POPUL.ATrIc CHARACrERISTICS (1976) HEALTH (1974) Crude Btrth Rate (per 1.000) 36.8 Population per physician 8,510 Crude Death Rate (per 1,000) 14.5 ~~~~~~PopuLation per hospital bed (1972) total 1,450 .Mortal,t (per 1.000 11cac birdhie) 149.1 -rban29 rrl 5,270 INCOOE DISTRIBUTION ACCESS TO LELECTRICITY (1973-746) t of national incoa. hLighest quintile n.e. . of dwellings total 2.9 lowest quintile n.S. EIDUCTTON ACCESS TO SAP!, WATER (1975) I of population total 12.0 ~~~~~~~~~~Adult literacy rate (1971) It of population total 12.0 ~~~~~~~~~Priasry school1 enrollmnt (1975) total 8 urban 46,0 rural 3.0 NUTRITION Calorie intake as I of requiranenta n.e. Per-calpita protein LocdaeeUS. GNP PER WAI1A Eli 1977: $232 (Atlas methodology, 1975-77 base period) GROSS NATIONAL PROUCr IN 1977 A___U_L' ____L_______C___________PRIM US$ Million 3. 1960-67 1967-72 1972-77 GNP at Market Prices 1,1fl.7 100. 0.1 L.7 1. Crass Doolostic Investmnt 207.2 17.6 -3.0 18.5 11.4 Gross NaLtional Saving 1/ 106.9 9. 1 416.5 23.4 - 4. 3 LLirylflL Accoutu. Banlcm -6.4 -4145 Expwt of Goods, lIPS 242.5 20.6 -2.2 11.2 5. imports of Goods, lNP 535.8 28.5 0.2 L1.0 11.9 01UTpUT. LABOR FottSe A;DFu 10CEVT INI 1977 Value Added Labor Porces V.A. per WAorker US$ Million % HI.% S Agriculture 44. 5 57.7 - Induacry 1 204. 2 17.2 . Services 533,0 4SA 1 Unallocated (Manufacturing) (118.81 10.0 Total/Average L,184.7 100O.0 . 100.0 ..100.0 %OVfllKEKf PiHANOE G;eneral Govrerent Central Government (G KUL&O~~ % ot Ml (C million) % of CDP cilli, ~~~~~~1977 M9y677L977 1976-77 Correnc tsc..tpce 678.31 U1.5 11.4 637.2 10.8 10.8 current Expauditur "S0.c 90j, *.1.0 -.3 6489 11.0 10.3 Currant surplus/Deficit 29.6 0.5 L.1 -11.7 -0.2 0.5 Capital Expenditures 534.7 L' 9.0 9.8 332.9 6.0 6.2 E5trs.nl Assistance (net) 474.5 I.' 8.0 7.2 6. MOHR Cuou1 AND PIn S _1970 1971 IIUZ 1973 1974 1975 lZ, 122.7 (aillian G oYutstanding end period) Money xad Quasi Hoeay 198 .2 231.2 322.7 410.2 532.5 597.6 800.5 958.3 Bank Credit to Public Sector V9 1~l.1 9.2 202.5 2 10.41 236,9 324.9 402.3 494.1 549.7 Bank Credit to Private Sector 15.3 78.5 110.4 188.1 328.8 477.6 549,8 682.1 (percentages index umbsers) Money aud Quasia Honey as 3. of CDP L0.0 11.3 13.6 14.4 15.3 14.5 15.8 16.2 General Price ledex (1965 - 100) WI0 114.6 120.3 127.2 148.8 l69.4 203.0 229.1 260.6 Annual P-arestrs, Changes in General Pri.a Index 3.3 4.9 5.7 17.0 15.6 19.8 12.9 13.77 Bank credit to Public Sector 9/ -2.1 7.0 3.8 12.7 37.2 23.8 22.8 11.3 Bank Credit to Private Sector 9.9 20.2 40.6 70.4 74.8 45.3 15.1 24.1 Hots: All converislons to dollars in thie table are at the average exchange rate prevailing during the period cowered. I' Data refers to PT "dndlg September 30. 2/ Does not include current transfers. it Mining,. manufacturing, public utilities, construction. t