22490: (Arthur) Building an Alternative Development Strategy (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Tttnhm@aol.com

Some list members have been asking about alternative development strategies.
Many suggestions were put forward in the mid-late1990s. Here is another
example from the Haiti Reborn/Quixote Center (no date):


Building an Alternative Development Strategy
http://www.haitireborn.org/campaigns/debt/building-alt-devel-strategy.php

Participation

Popular participation is necessary if a strategy is to be successfully
implemented. A comprehensive development strategy must be the result of a genuine,
thorough process of consultation with the people of Haiti.

Defining Development

Development cannot be reduced to the growth of the GNP or the degree of
insertion of a low wage component. These two factors are critical elements in the
“global economy”, which has been constructed in the interests of transnational
corporations and international finance, at the expense of human decency and
democracy. Real development addresses sustainable and universal improvements in
the material and cultural well-being of the majority.

Structural Adjustment or Radical Reform?

Structural Adjustment Programs, as conceived and imposed by IFI’s throughout
the developing world, have had disastrous consequences for the poor. Imagine a
policy where the benefactor is an entire nation, and not the business elite.
Profound economic reform is required, but its means and its ends must be
different from those that neo-liberal views express.

The Economy

Any successful economic development is based, at least initially, on the
development of the national market and raising real wages. Export sectors alone
cannot be the motors of development, particularly when: a)the majority of inputs
are imported, b)the domestic economy is too often unconnected, c)most profits
are repatriated, and d)success is based on lowering wages and worsening
working conditions in an “international race to the bottom line.”

In Haiti, an auto-centered, integrated, articulated economy must aim to
develop the productive apparatus of the nation, rather than with an extroverted
economy that merely uses Haitians as cheap producers and consumer of surplus
production from the US.

Agriculture

Eighty percent of Haitians still make their living from the land. There is an
urgent need for land reform that offers cheap credit to encourage producers,
technical assistance, a degree of tariff protection in key areas and
investment in infrastructure.

Agricultural development must be seen not simply as a source of surplus, nor
as a reservoir of labor for industrialization, but as a vital sector, where
production and living standards must be raised. The rural exodus of hopeful
workers toward the capital city, where the job market and physical structure are
in a state of collapse, must be replaced by a demand for domestic industrial
production. In the mid 1990’s, a U.S. $560 million aid-package assigned 1.2% to
agriculture.

Without a degree of food security based on national production, all economic
policy is hostage to international pressure. The production of basic foods for
the national market must be the priority.

Industry

As with agriculture, some protection is needed to keep the already
debilitated national industrial sector from being wiped out. At the pinnacle of its
activity, the assembly/export sector employed some 50,000 Haitians, mostly women,
in terrible conditions and at miserable wages.

The $134 million export of light manufacturing in 1990 looks good on the
surface. $111.8 million of the inputs were imported and most of the profits were
sent back to other countries. The overall contribution to the welfare of
Haitians and national development was very small.

In the current context of global cut-throat competition, even modest targets
are likely to be unreachable. National production should be geared toward
satisfying the growing demands of a reformed and diversified rural economy. It
should also be oriented to respond to the basic consumer needs of urban and rural
populations. Small and medium sized companies need credit, technical
assistance and some market protection. The industrial and agricultural sectors need to
be articulated, that is to say, they must service each other’s needs.

Trade

Clearly, international trade is essential. It must, however, focus on the
interests of the majority of the population and on national production.
Protection of certain areas of agricultural and industrial production is imperative.
Imaginative research into and development of agricultural and transformed
agricultural products, artisan production, and light industry for export, is vital.
A tourism industry that is socially and environmentally responsible is needed.
Exports cannot be allowed to entirely replace local production for local
needs. A dynamic export sector must be a part of the development strategy, it
cannot be the strategy.

Monetary and Fiscal Policy

The IMF requires the elimination of budgetary deficits and inflation,
sacrificing hope of real growth and internal development.

The IMF requires no distinction between irresponsible deficit financing to
cover careless or corrupt financial management, and borrowing to finance the
construction of productive mechanisms. In line with IMF policy, ceilings on
interest rates have been abolished. Current interest rates in the formal sector, to
which only a tiny elite has access, are around 35%. Poor peasants in the
informal sector pay interest rates from 20 to 100% per month! What productive
investment can be competitive in such conditions?

The defining characteristic of IMF policy is to enable national debt
repayment. This unjust debt burden should not be used to distort an entire development
strategy.

The distribution of wealth in Haiti is grotesquely unequal. Radical,
progressive, direct taxation is required, rather than an excessive reliance on
indirect taxation, which hits the poorest hardest.

Foreign Exchange

The current IMF-inspired free-floating exchange rate subjects any economic
policy not in synch with neo-liberal orthodoxy to instant retribution. During
the anti-privatization unrest that led to former Prime Minister Smarck Michel’s
resignation, U.S. AID withheld balance of payments support, causing the
Haitian gourde to plummet and generating substantial inflation. Some form of
controls are needed. A system that establishes priorities for the use of scarce
foreign exchange is quite reasonable in a desperately poor and wracked economy.

Privatization

The rushed and unselective application of this controversial process –
another neo-liberal element -- to a devastated and profoundly unorganized country,
would be very dangerous.

The World Bank itself admits that the privatization of national monopolies,
particularly of basic services, in very poor countries with no regulatory
structures is an extremely risky process.

This is exactly what is being forced on Haiti’s fragile democracy. An
extension of basic services such as potable water, electricity and telecommunications
to poor and marginalized areas are needed. There is no evidence that
privatization in the Third World has ever achieved this.

An alternative development strategy needs powerful tools. The privatization
of strategic areas of the economy will reduce the State’s revenue in the long
term, as well as its capacity to influence the overall direction of development.

Haiti’s telephone company, Teleco, generated $71 million of foreign exchange
last year, with $42 million in profit. It is clear that this inefficient yet
profitable company needs reform, but not in the nation’s interest to hand the
largest source of hard currency over to a transnational corporation.

The Environment
Only about 0.2% of the $560 million of recent foreign aid was assigned to the
environment. If the frightening degree of environmental degradation in Haiti
is to be halted, and indeed reversed, a development strategy must address
factors such as:

    * economic structure
    * tenure and utilization of land
    * level of rural incomes
    * availability of energy sources other than charcoal for poor urban
dwellers
    * education and awareness around reforestation

Gender

Gender equity in economic, political, legal, cultural and personal life is an
imperative, both in the interests of justice and effective development
strategy.

The unpaid labor of women in the home and the badly paid labor in the formal
sector shape the labor market. The marginalization of women in agricultural
development policy cripples such policies. The exclusion of women from effective
participation in political life makes a mockery of democracy.

Oppression and violence in personal lives have devastating effects on the
quality of life of families and communities -- society as a whole. Gender
oppression must be addressed at each and every stage of a development strategy that
purports to aim at human emancipation.

The State

In Haiti, the State’s participation in national life is largely absent.
Neo-liberal policies seek to minimize the State’s role even farther.

Public education and public health is inadequate by any criteria. Taxation is
chaotic and sporadic. The legal and justice systems are ineffective.
Regulation scarcely exists. Massive non-payment of bills for basic public services is
rife and unsanctioned.

Haitian genius for improvisation and self-regulation must take credit for the
nation’s ability to avoid complete collapse!

Haiti’s administrative structure needs to be modernized and streamlined to
make room for a new public service culture, one of increased public
accountability, with new ways of involving civil society.

The International Community

There is an arrogance in the conditions imposed by the International
Financial Institutions, U.S. AID and much of the donor community, where a lasting
solution is not offered.

The desperately poor Haitian majority must not be squeezed into a structural
adjustment program designed to pay back loans they have never benefited from.
Nor should they be forced into a subordinate role as cheap producers in a
global economy that has no interest in their welfare or their power as consumers.

Better even than the critical – life saving -- support given to Haiti by
communities from richer nations is a solidarity in the struggle for participatory
democracy. IFIs and governments need to feel pressure from informed, vocal
citizens before they will move to change harmful policies.