Around the world, the biggest responsibility in government officials and policymakers’ jobs is to spur economic growth, create jobs, and increase the economic and social welfare of the society in which they govern or exist overall. A country’s ability to attract and keep foreign direct investment has a tremendous impact on jobs, economic growth, and welfare of the citizens. However, this is not something that Haiti has historically been able to hang its hat on. According to the World Bank, in 2017, Haiti was the 181st country out of 190 when it comes to the ease of doing business. Forbes’ annual The Best Countries for Business ranking which ranks which countries are most inviting for capital investment ranked Haiti 3rd from the bottom out of 153 countries. It is time to change that.
The Forbes ranking is compiled using data on the following: property rights, innovation, taxes, technology, corruption, freedom(personal, trade, and monetary), red tape, investor protection, and stock market performance. Understanding what kind of data and information actually goes into these indexes and rankings helps us begin to think about how we ca create change piece by piece at a more granular level. How do you attract business and encourage foreign direct investment in a developing country like Haiti that has a poor development record and is fighting a seemingly uphill battle? Think about it; Haiti does not even have a stock market to begin with.
There are many different steps that can be taken to foster an environment that attracts investment, retains business, and enables valued domestic businesses to thrive, and it is important to understand that it takes a combination of individual and collective initiative to improve some of the aforementioned parts of what we define as “a place where it is good to do business”.
Where better than to start than with education? A young, educated workforce something that firms look for and is a crucial piece of the decision-making process that firms go through when deciding where and how to direct investment in the private sector, which makes it important for a country to have. Not only does a more educated workforce create more competition for jobs (where as the best of the best rise to the top), but the baseline pedigree for what gets you in the door in the private sector in Haiti challenges and incentivizes the next wave of workers to rise above that to be competitive. Just as the high-school education as a proxy for entry level jobs used to be prevalent in the U.S., a college education is now assuming that role, leading to more and more people going on to specialized programs,graduate school, etc. to stay competitive; this makes the labor force more educated and it ultimately benefits the economy as a whole.
A young, educated workforce not only makes companies more productive, but young workers are more connected to what the world needs,especially when it comes to innovation and tech. Building on this idea, I think that investing in infrastructure ahead of the demand will be crucial to attracting timely investment and businesses into Haiti. When competing with developed countries in high-skill or low-skill sectors, you have to realize that companies looking to invest have an agenda, and you have to be ready when they come knocking. They have a product or service, and their goal is to get the ball rolling to fill a need and get it to market. The response time would take too long unless you have educated, entrepreneurial, and business-minded people of credibility making the call on where to allocate resources that will lead to Haiti being prepared.
There is also a space for country-wide education and NGO cooperation to occur in terms of talking about what the demands of tomorrow and the future of the labor force will look like, because there are people from other countries in NGOs that have grown up in a business-friendly business climate and/or are keen to what the labor market might look like in the coming years.
Another way that Haiti can attract more foreign direct investment and be more open for business is to work towards political stability. Not only is instability a deterrent for mission teams, tourists, and other visitors that would come to Haiti, who at the very least benefit the economy by coming in and spending their money, but it causes lower productivity levels in-country and discourages things like entrepreneurship, extension of capital, human capital accumulation, etc. because of the heightened risk that instability brings.
Building on the point that stability is crucial to economic growth and increased social welfare, it is also important for people of credibility and high pedigree to be in positions of power and leadership, so that businesses trust who they’re doing business with and so that they will be confident moving forward that they will be have the support structure and assistance needed to succeed and navigate doing business in a new country.
Countries should strive to not just poor free money into Haiti to put a band-aid over the problems, but to facilitate a marketing campaign or engage in direct investment that will cause people to come down and spend their money and create more jobs. The Haitian people want to work, and they want to be able to do business. It’s up to the country to decide if it wants to turn the corner once and for all in order to make it up to the rest of the world to invest rather than give.
Click here to read my book ‘ From Aid to Trade’ for more analysis of how Haiti and other developing countries can get out of poverty.
References