Shut Up and Dribble

The Fork in the Road: Freedom is not free 

 

As observed in a previous section, before 1960, Haiti and The Dominican Republic were virtually tied concerning GDP and capital incomes. But then, the Dominican Republic was afforded a fork in the road and now has GDP and capital incomes nearly 800% higher. What accounts for this meteoric rise to superstardom for one and the dreadful fall of the other? In this section, I will explore this fork in the road. We shall discover that this fork, and the access to significant resources, enhanced policies, and a whole range of choices demonstrates how to structure success for one and failure for another racial state. The fork in the road consisted of becoming a "most favored nation" and enhanced trade and investments and liberal immigration, which provided easy access to education and training. In the end, we have a trading partner, a major tourist hub, and billions of dollars flooding the Dominican Republic. In Haiti, freedom was significantly curtailed, and failure was assured. While broader choices, access availed a wider range of options for the Dominican Residents, hence freedom. What this will demonstrate is that freedom is not free. Let us begin.

 Follow the Money: Trade

 A few examples demonstrate how different the U.S. and other Western Nations have engaged the Dominican Republic and Haiti. If we follow the money, particularly the separate trade treaties, the tale of these two nations becomes obvious. One set of treaties led to success, while another to disaster. Considering the Dominican Republic, with the aid of the U.S., was able to establish one of the first free zones in the Western Hemisphere. This program, allowing for diversification and massive growth, was fueled by the offshore U.S. textile and garment industry. Established were preferential trade agreements with extremely favorable exchange rates that shifted the Dominican Republic from a commodity-oriented economy to one whose manufacturing sector was the fastest growing in the Western Hemisphere. It went from a GDP of just 18 percent in the 1970s to 30% by the 2000s. In 2003, it peaked and accounted for 7.5 percent of the country's total GDP and 90 percent of exports.  (Bargaud and Farole   2011).  However, all of this changed due to a recession caused by economic instability between 1999 and 2003. This instability was associated with the rise in oil prices, the significant decline in tourism after 9-1-1, the failure of the second-largest Dominican bank, Baniter, and intense competition from China. The 2004 Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR)  provided preferential access to agricultural and manufactured goods.

The GDP, which had been gradually growing over the previous decades, leaped from 22.51 billion to 35.95 billion in the first year of implementation. Each year, with few exceptions, it has continued to soar. It sits at slightly over 112 billion; future predictions suggest this will continue.

Dominican Republic: Gross domestic product (GDP) in current prices from 1987 to 2027(in billion U.S. dollars)

 

 

Source: Dominican Republic - gross domestic product (GDP) 1987-2027 | Statista

Now consider the case of Haiti and the Caribbean Basin Initiative, a trade initiative of the U.S. intended to bring about economic recovery. The act, coming into effect January 1, 1984, aimed to provide tariff and trade benefits to many Central Am American and Caribbean countries. Under this agreement, it prevented the Un/S. from extending preferences to certain countries judged to be contrary to the interests of American businesses, farmers, and entities. Before this act, Haiti was almost self-sufficient due to its rice production. But after CBI came into being, liberalizing Haiti's economy and forcing it to reallocate nearly one-third of its food production toward export crops, it resulted in the shrinking of its rice industry as it could no longer compete with the cheaper, subsidized U.S. rice imported  Haitian farmers were devastated, rice production plummeted, and rural Haitians farm workers were reduced to near poverty  (Doyle 2020 and Mullin 2018)      

 

Bibliography

Barguard, Jean-Marie and Thomas Farole. 2011. "When Trade Preferences and tax Breaks are No Longer Enough: The Challenge of adjustment in the Dominican Republic's Free Zones," in Special Economic Zones: Progress, Emerging Challenges, and Future Directions, edited by Thomas Farole and Akinci. The World Bank.

Doyle, Mark (2010). "U.S. urged to stop Haiti rice subsidies." BBC news. Accessed on 1/6/2023 at URL: U.S. urged to stop Haiti rice subsidies - BBC News.

Mullin, Leslie 2018. "How the United States Crippled Haiti's Rice Industry." Accessed on 1/6/2023 at URL: How the United States Crippled Haiti's Rice Industry – Haiti Action Committee (haitisolidarity.net).