The Reason I Care: Unchecked Inequality and Corruption in the Dominican Republic and Haiti

I co-authored a comparative economic analysis of the Dominican Republic and Haiti and uncovered multiple layers of unchecked inequality and corruption instead. Here's the recap.

The Dominican Republic and Haiti share the same island, but their economic development is far from equal. Is this due to something fundamentally different about each country? Or is it due to other factors, such as development, policies, and corruption?

The two nations have seen glorious days of high economic growth and wellbeing, and it is possible to see these days again.

The drastic difference in economic development between the Dominican Republic and Haiti is the result of centuries of colonialism, foreign occupations, and conflicts. While the island was conquered by Christopher Columbus, it later became a divided territory: half-French and half-Spanish. Thus, some fundamental events and practices influenced the way the two countries evolved and ultimately how their economies developed. Originally, Haiti was a profitable slave state for the French. Upon liberation, it became a “slave haven” to which many black slaves escaped. Haiti had gone from the richest country in the Caribbean, with multiple years of economic prosperity, to one of the poorest in the world as its economy drastically slowed down. On the other hand, the Dominican Republic had grown slowly but surely and maintained good stability relative to Haiti. The two economies ought to have similar potential for prosperity, yet Haiti lags behind.

Hispaniola's History

Dating back to Christopher Columbus’ journey in 1492, the Spanish colonization of Hispaniola brought about different styles of business, governance, and organization. When the Spanish arrived in 1492, they began the formation of the “Spanish colony” by spreading ideas of Christianity and exploring the island for wealth. Around 1680, the French came to the island of Hispaniola and took over the western part of the island, which Spain eventually ceded in 1697. This led to the creation of the nations of Spanish-ruled Santo Domingo in the east, now the Dominican Republic, and the French-ruled Sainte Domingue in the west, now Haiti.

History of the Dominican Republic

Under Spanish rule, Santo Domingo lagged behind Haiti, the French colony to the west. In 1821, the Dominican Republic declared itself free from Spain and became a sovereign nation for a brief period until the Haitian Occupation of 1822. On February 24, 1844, the Dominican Republic was declared free from any and all international potencies and began its sovereign expansion.

In the early 1900s, as Haitian power started to weaken, the Dominican Republic started to grow and develop multiple industries, including sugarcane. Because of the expertise of the Haitians in this industry, the Dominican Republic brought in Haitian nationals to work in the sugarcane fields. Some could argue that this was an extension of Haitian slavery in the Dominican Republic, and thus it led to civil and political tension between the two nations. A consequence that still exists to this day, Haitians face discrimination and unequal treatment at the hands of Dominicans.

Spanish rule on the eastern side of the island accounts for a similar historical background, but one that is slightly less destructive. Dominicans also developed a strong presence in the global sugarcane and coffee markets. However, Spanish colonialism was less destructive than French colonialism for various reasons. First, while the Spanish brought some slaves from African countries, they started bringing them only after the local indigenous people, the Tainos, started to get sick and die. While the Tainos oversaw cultivating crops for export, they took better care of the land because they had a personal attachment to it. Second, the Spanish themselves started settling on the island, leading them to think about more sustainable measures rather than quickly exploiting everything in the name of wealth. Third, the Spanish colonizers had a stronger emphasis on the mining of precious metals, such as gold and silver, from East Hispaniola before they focused on agriculture. The lag in agricultural exploitation allowed for Dominican arable land to be protected and reusable for several years beyond Haiti’s land. In turn, this resulted in less instability in the future, as the environment was better and there was no serious concern about food insecurity in the Dominican Republic.

More recently, the Dominican Republic continues its efforts to reform and industrialize to create intrinsic growth and generate better economic health. After World War II, the Dominican economy started to shift into an era of export-led growth, which caused a booming expansion of export agriculture. The Trujillista regime began in the 1950s and is responsible for most of the economic expansion after the war; Trujillo had nationalist sentiments and ambitious ideas for the country.

As export agriculture grew, there was also a development of import-substitution industrialization. Both phenomena helped the Dominican economy grow for multiple reasons. The increase in exports and decrease in imports creates a net increase in national production, which translates to an increase in GDP. Import-substitution industrialization had a focus on building materials, food processing, and apparel. This expansion created a more self- sufficient Dominican economy that continued to grow and expand beyond the Trujillo regime.

History of Haiti

After the French acquisition of Haiti, Haiti was considered the “jewel of the French Atlantic,” with booming agricultural industries in sugarcane and coffee. Haiti began to grow economically as their sugarcane industry expanded to be the leading producer of sugarcane in the world. In turn, as sugarcane cultivation and export expanded, so did the population of African slaves imported to Haiti. French colonialism was largely based on slavery and forced labor. It is known that “the prosperity of the French colony” was based upon slavery. Rather than focusing on sustainability and long-run growth, all French industrial efforts were modeled to be as lucrative as possible. By the time of the French Revolution, the population of slaves in Haiti was somewhere between 500 and 700 thousand.”

Because of the high rates of oppression and forced labor, Haitian slaves revolted in 1791 and created the first black independent nation in the Western hemisphere. However, their freedom came at a cost. Haitians had to “buy their freedom” from the French, in which the Haitians were forced to sign an agreement to pay “150 million francs of war indemnities paid in just five years.” This freedom deal left long-term effects on the Haitian economy, and the immense amount of debt put the former French colony behind. Additionally, the lucrative agricultural methods of the French left Haiti with a lot of non-arable land and instability that paved the way for multiple invasions and threats to national sovereignty.

Economic Analysis

I analyzed economic indicators and economic industries in the Dominican Republic and Haiti to provide a more well-rounded analysis of the two countries.

Dominican Republic

The Dominican Republic, on the other hand, fares much better than Haiti when it comes to economic indicators. With a mixed-market economy, the country’s GDP of $173 billion is ranked as the 72nd highest GDP in the world and is more than eight times higher than Haiti’s GDP. Additionally, trends of the Dominican Republic’s GDP per capita depict an increase of around $1,000 per year since 2015 and it was about $17,000 in 2017. The Dominican Republic has a GDP real growth rate of 4.6%, indicating that its economy is growing almost four times as much as Haiti’s. Though both nations are on the same island, the economy of the Dominican Republic is structurally different from Haiti’s.

The Dominican Republic has transitioned from an agricultural-based economy relying on the export of sugar, coffee beans, tobacco, and cacao to an economy where nearly two-thirds of its GDP is composed of jobs and companies in the high-value service sector, such as tourism and customer services. Because their economy is not dependent upon agriculture, the Dominican Republic’s economy is not as detrimentally affected by natural disasters in the same ways Haiti’s economy is. The country’s external debt is also significantly lower than Haiti’s at $29.16 billion. The Dominican Republic also has stronger infrastructure and institutions due to direct foreign and government investments. The Dominican Republic's Gini coefficient as a measure of the equal distribution of income is 44.9 in 2015, making it a more equal country than the United States but a less equal country than Haiti. The dependence on services as their dominant industry aids in maintaining an unemployment rate of 5.1% and a low inflation rate of 3.3%.

On the other hand, despite not being as intensely affected by natural disasters and having a services-based economy, the Dominican Republic still has 30.5% of its population living below the poverty line. Similarly to Haiti, corruption exists in the Dominican Republic. According to Transparency International’s Corruption Perception Index (CPI), the Dominican Republic was ranked as the 129th most corrupt country out of 175 countries in 2018, pushing it towards Haiti’s ranking of 161. Corruption in the Dominican Republic manifests itself in the forms of high criminal activity such as trafficking and contract killings, the lack of public safety measures, political corruption, and theft. Many protestors fight against these injustices and call for the removal of the Dominican Liberation Party, which is the political party that has been in charge since 2004. People’s discontent with the current government generates a general discontent with the country as a whole. Tired of empty promises from the Liberation Party, Dominicans may take the country in a different direction during the 2020 elections. Until corruption and widespread crime are decreased in the Dominican Republic, the nation will face the possibility of stagnant or decreasing growth of its economy.

Haiti

Looking at the countries today, Haiti’s Gross Domestic Product (GDP), at $19.97 billion, currently ranks as the 150th highest GDP in the world. With just over 200 countries globally, this makes Haiti’s GDP one of the lowest in the world despite its free-market economy with tariff-free access to the United States. GDP is an important measure of an economy’s total production, and Haiti’s ranking reveals that its economy is not nearly as productive as the economy of the Dominican Republic, despite being located on the same island.

Since 2015, levels of inequality improved about twenty points on the Gini coefficient scale, decreasing from 60.8 to 41.1 in 2017, but Haiti’s GDP per capita of $1,800 is strikingly low across the board. According to the CIA World Factbook, 22.1% of Haiti’s GDP consists of agriculture. Additionally, their GDP is largely based on forestry and fishing. This means Haiti’s economy can easily be damaged by natural disasters such as hurricanes and earthquakes. Natural disasters and their effects on Haiti’s economy frequently cause high unemployment rates (40.6%) and high inflation (14.7%). Much of Haiti’s external debt following the 2010 earthquake was international assistance and loans, which is an additional economic consequence of these natural disasters. However, since 2017, Haiti’s $2.762 billion of external debt is owed to Venezuela for the PetroCaribe program, a program intended to provide monetary aid to improve infrastructure, education, and healthcare. Haiti does not have the physical infrastructure in the form of buildings, roads, and electricity grids to withstand the wrath of the earthquakes and hurricanes they face, and the government relies on international aid to build and rebuild the country’s infrastructure and economy every couple of years. Finally, there is also a lack of direct foreign investment because of the weak economy and infrastructure and the difficulty of doing business in Haiti. Haitians are averse to foreign establishments and skeptical to let foreigners establish business and industry in their land. After independence, the nation aggressively and deliberately rid itself of all colonial institutions. Haitians prohibited foreign land ownership and re-established agricultural practices to suit their preferences. Tired of being mistreated and fearing international retaliations, Haiti closed itself off without considering the effects of this in the future.

Outside of these economic indicators, Haiti also has a significant problem with internal corruption. Haiti’s corruption rank based on Transparency International’s Corruption Perceptions Index (CPI) for 2019 is 161 out of 175 countries, making it one of the most corrupt countries in the world. Corruption is present in all levels of government in Haiti, which often causes protests for the removal of the country’s president or a more equal system. Many of the government’s officials will embezzle money from Haiti’s government instead of using the money for improving education, infrastructure, and healthcare services for Haiti’s poorest citizens, such as with the most recent embezzlement of about 23 percent, or about $635,000,000, of the PetroCaribe program’s $2.76 billion in aid. As long as widespread government corruption continues to exist in Haiti, there will be many challenges to improving the current state of the country’s economy, education, and infrastructure. In an ideal situation, Haiti’s GDP and GDP per capita should be as high as possible. Simultaneously, its unemployment rate should be between five and ten percent for a developing country, its inflation rate should hover somewhere around two percent, and its national debt should be manageable. However, Haiti’s agriculture-based economy, lack of infrastructure, high levels of corruption, and susceptibility to natural disasters leave 58.5% of its population living below the poverty level, as can be seen in Chart 2, compared to the Dominican Republic’s 30.6% of its population living below the poverty level.

Sugarcane

After Christopher Columbus brought sugarcane to the shores of Haiti, it had become Haiti’s second most popular and profitable crop after Arabica coffee. Throughout the 1970s, world prices and demand for sugar were high. Haiti was exporting six million tons of sugar by the middle of the decade. In the 1980s, world prices for sugar were three times lower than the costs of production in Haiti; quickly came the decline of sugarcane as a cash crop in Haiti.

Additionally, Haiti now suffers from agricultural issues such as soil erosion, deforestation, and droughts, making it difficult to continue growing sugarcane. The difficulty of growing sugarcane makes the production of other goods, such as the Haitian alcoholic beverage “clairin,” difficult and expensive as well. Since the 1970s, Haiti has been a net importer of sugar as its farmers have begun shifting their focus to growing other profitable crops, such as corn, sweet potatoes, rice, plantains, and bananas. These, however, are not major export crops for Haiti.

Most recently, the production of cacao has become a crop of interest for many small-scale Haitian farmers. Though the production of cacao in Haiti is still small in numbers, production levels could increase in upcoming years due to the high interest in Haitian chocolate, which is described as sweet and “unbeatable.” By 2024, new programs, such as USAID’s Feed The Future North program, advocating for the growth of cacao in Haiti hope to increase production levels to average world production levels of about 10,000 tons of cacao per year. In Haiti’s transition from one sweet profitable crop to another, focusing on the production of cacao rather than sugarcane can yield high profits for Haiti for decades to come.

Sugarcane has had a similar history in the Dominican Republic as it has had for Haiti. The sixteenth-century saw the first introduction of sugar production in the Dominican Republic, which sparked a wave of agricultural production around the country’s capital, Santo Domingo. Carrying over into the seventeenth century, production of sugar spread more to the rural areas of the country and remained relatively stable in these areas until the 1950s. The amount of land used for sugar production peaked in the 1960s and 1970s, as production needed to accommodate the rising levels of sugar consumption in the United States.

During the 1980s, the Dominican Republic was exporting about 950,000 metric tons of sugar. Yet, the Dominican Republic faced a similar predicament as Haiti; sugar prices around the globe did not outweigh the costs of production. Fortunately for the Dominican Republic, industry and services were already accounting for a combined total of about 80 percent of GDP. The decrease in sugar production did not harm its economy as severely as it did Haiti’s. Since then, the Dominican Republic has focused on expanding the thriving areas of its economy, including services and most recently, tourism.

Tourism

Outside of agriculture, Haiti was a booming tourist location in the 1950s. However, years of corruption, political instability, poor public health, and poverty have deterred foreigners from traveling to Haiti. Fortunately, Haiti has had a revival in its tourism industry since 2012.

After the earthquake in 2010, thousands of volunteers and millions of dollars in aid poured into Haiti to restore the country’s infrastructure and public health. The period of regrowth and internal investment sparked a global interest in Haiti and its economic development, therefore promoting a new industry in tourism. Tourism has boosted Haiti’s economy by promoting local spending and the improvement of current infrastructure. The influx of foreigners into Haiti promotes local spending and investment into Haiti’s economy and brings awareness to issues plaguing the island nation. Yet, despite the benefits that tourism brings to Haiti, there are many downfalls to the industry as well.

As an island nation, Haiti’s resources and the economy are dependent on the country’s environment. High increases in global tourism are known to cause environmental distress through air pollution, trash, and the disruption of fragile ecosystems, especially for oceans, beaches, and national monuments. Any damage to these areas in the already poverty-stricken nation of Haiti could cause detrimental effects to both the agriculture and service sectors of their economy. Additionally, levels of tourism tend to rise and fall. With the high risk of political protests and disruption in Haiti, rates of tourism are more susceptible to fluctuate between high-highs and low-lows. The risk of inconsistency in tourism as a consequence of environmental issues, natural disasters, or political events puts a strain on how valuable tourism can truly be for Haiti’s economy.

Like it is in Haiti, tourism is another important industry for the Dominican Republic. Since the early 2000s, resorts have been built around popular tourist destinations in the Dominican Republic, such as Punta Cana, Santo Domingo, and Puerto Plata. Popular tourist locations are centered around beaches, resorts, and historical monuments, which promotes local spending and incorporates a new trend called “ecotourism,” in which people will travel to places that are environmentally “exotic” or at-risk to see the locations and potentially help with environmental conservation. Additionally, while most of the tourists pour into the Dominican Republic from the United States and Canada, tourism promotes the exchange of cultures and exposes outsiders to the resources and potential available within the Dominican Republic.

However, there are downfalls to the tourism industry in the Dominican Republic as well. Because the Dominican Republic is on the same island as Haiti, they face similar issues with tourism. Though the Dominican Republic has been maintaining a sustainable form of tourism for several decades now, they remain as at risk as Haiti for negative environmental impacts of tourism, such as air and ground pollution, the degradation of natural resources, the disruption of fragile ecosystems, and trampling impacts of vegetation and soil. Natural disasters can also impact levels of tourism and the environment that the tourism industry relies too heavily upon.

Additionally, though political disturbances in the Dominican Republic do not tend to affect tourist rates, international scandals, such as the questionable deaths of at least ten Americans at Dominican resorts over the second half of 2018 and the first half of 2019, greatly impact levels of tourism. Since these instances have occurred and Americans have the highest rates of tourism to the Dominican Republic, tourism rates have dropped by 74 percent. It is clear that although tourism has been a successful and relatively sustainable industry for the Dominican Republic, there are still environmental risks posed by tourism. Rates of tourism are also susceptible to fluctuations based on natural disasters, political events, and, as was demonstrated in the first half of 2019, international scandals.

Tourism as an industry in the Dominican Republic has kept the economy afloat and growing for years, and it can remain that way as long as the country is practicing sustainable tourism. Yet, it is important to acknowledge that tourism is a dynamic industry with high-highs and low-lows regardless of which country it is in, and the Dominican Republic must account for that as they continue to promote their half of the island as a go-to Caribbean destination.

Conclusion

Both Haiti and the Dominican Republic have faced rocky roads toward development that influence their economic status and health today. The Dominican Republic is fortunate to enjoy a relatively self-sufficient economy that does not require constant foreign bailouts. Haiti, on the other hand, has been faced with a lot of shocks that have forced it to resort to foreign assistance, leaving it with very big amounts of foreign debt. The Dominican Republic and Haiti have a lot of improvements to make to foster more prosperity in their economies.

Both nations need to take strong action against political corruption within their borders. It is not only the fact that politicians are becoming too powerful but also the civil instability that this is causing. People are growing more resilient to political corruption and are starting to protest and show discontent more and more. Instability, as seen in Haitian history, is a factor for stagnant growth and could be very dangerous for both nations.

Additionally, given recent trends in tourism, there is potential for both nations to focus on expansion. While this is an industry that yields high returns and could boost economic growth, it needs to be developed sustainably. Tourism cannot grow at the expense of local wellbeing and industries. Similarly, strict rules about conglomerates and antitrust regulations need to be in place for tourism to continue growing in a way that benefits the nation. Just like politicians are corrupt, so are the wealthy; they tend to look out for their own good instead of the general good of the nation.

Therefore, there needs to be antitrust and anti-corruption laws and regulations in place for local businesses, farmers, and civilians in the areas with high tourism. There is a lot of work to be done before the Dominican Republic and Haiti can reach their full potential; however, it is not impossible. The two nations have seen glorious days of high economic growth and wellbeing, and it is possible to see these days again.