It is sometimes said that the widening gap between the rich and the poor is due to the fact that capital is so easily shifted around the globe while labor, bound to family and place, is not. But there is nothing natural about this. Human beings, after all, have wandered the earth for ages – crossing oceans and continents, in search of food, land, and adventure – whereas a factory, shipyard, or office building, once built, is almost impossible to move in a cost effective way. In the decades following World War II, many Latin American countries were involved in Import-Substituting Industrialization (ISI) to be self-sufficient and maintain their nationalism. The decision to adopt aggressive programs of ISI benefited these countries and their citizens in some aspects. By industrializing, these countries could reduce their dependence on expensive imported manufactures. ISI programs allowed individual nations to reduce imports of consumer goods with high import duties while promoting expansion of domestic companies to produce these goods. Expansion of these companies meant that more jobs would be opened for citizens and essentialities became cheaper, benefiting the nation as a while. Later, when Multinational Corporations (MNCs) were brought into the picture, the fixed and immobile long-term investments increased capital flow into the countries – promoting growth and a sense of stability. A company could not just pick up and return home, leaving a country destitute, and lacking resources to grow.
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Along with the profitable businesses introduced to the country, these industries brought with them new technologies. Citizens of the country were encouraged to take advantage of training, including taking classes on managerial skills and other training. Because these MNC’s provided long term growth for these countries (because short term, quick-fix economic plans only solved debt problems temporarily), many countries were given the option to benefit from these companies that came over assigned to a role of capitalist development through a program of economic and social engineering. But how is it that one country may flourish despite the constant changing of a global economy, while one remains at the bottom of the totem pole? On one side of the globe, the backbone of Taiwan’s success story has given birth to democratic rule and the development of one of the world’s most advanced economies. The shift gave birth to new technologies and growing industries, all benefiting the society. At the same time, miles and miles away, Haiti remains, damaged by the continual failure of their own government that has directly and indirectly affected the Haitian community. Haiti’s problems are uniquely different from her Latin American counterparts.
Years and years of struggle, and Haiti is still “poor little Haiti”. Taiwan – The History of Taiwan’s Economic and Historical Evolution In the space of a generation, the small island of Taiwan has seen the birth of democratic rule and development of the world’s most advanced economies. At the end of 1990, Taiwan’s population exceeded 20 million, which makes the island one of the world’s most densely populated places. Except for the approximately 350,000 aborigines, the people of Taiwan originate from the Chinese mainland, most from the coastal providences of Fukien. Chinese migration to Taiwan began as early as A.D. 500. Dutch traders claimed the island in 1624 as a base for trade with China and Japan. It was ruled by China’s Manchu dynasty from 1683 until 1895, when China ceded Taiwan to Japan after the first Sino-Japanese war. Following World War II, China regained possession of Taiwan. A civil war in Mainland China between Nationalist and Communist forces ended with the victory of the Communists in 1949. Nationalist leader Chiang Kai-shek fled to Taiwan, proclaiming Taipei the provisional capital of Nationalist China.
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In 1971, the People’s Republic of China replaced Taiwan in the United Nations. Taiwan’s ROC Constitution is based on the Principles of the People: Nationalism, Democracy, and Social Well-being. The Constitution was introduced on January 1, 1947, and put into effect on December 25 of that same year. The National Assembly has amended it three times in recent years. Major amendments stipulate that the president shall be elected by direct popular vote to a four-year instead of a six-year term. The first direct popular election of the president was held on March 23, 1996. While the Republic of China still maintains it is the legitimate ruler of all China, nearly all nations, including Taiwan, now recognize the mainland’s People’s Republic of China. The first official talks regarding reunification were held in 1993, and an historic accord was signed committing the two countries to continued dialogue. Since World War II, Taiwan’s economy has changed from agriculture to industry. A past emphasis on light industry producing mainly consumer goods has shifted to technology and heavy industry. Although only one-quarter of the island is arable, farmland is intensely cultivated, with some areas producing two and three crops a year. Though rice, sugar cane, fruits, tea, and fishing are important, much food must be imported. Until the historical opening of the People’s Republic of china by United States President Richard Nixon, Taiwan was the “little yellow adopted brother of the United States” (van Kemenade, 111).
Taiwan was seen as a country who could not decide anything for himself and constantly looked for his big brother, the United States, for protection.
The sustained United States military and economic aid (and capital), which went to South Korea and Taiwan in the 1950’s and 1960’s, played a crucial role in strengthening the capabilities of these emergent national security states. United States Military aid to South Korea between 1945 and 1979 was about $7 billion. As much as 75 percent of Taiwan’s infrastructure investment came from United States economic aid in the 1950’s. This was more than all the United States economic aid to Africa and half the figure for all of Latin American over the same time period. In the 1950’s and increasingly in the 1960’s, manufacturers based in Taiwan gained privileged access to the North American market, while the United States tolerated Taiwan’s protected markets and their government’s tight control on foreign investment. Taiwan entered the world export markets when a consumer boom was under way. By the 1970’s, Japanese trading countries controlled fifty to seventy percent of the international trade of South Korea and Taiwan. In this period, Japanese corporations also provided a substantial portion of the machinery and other components needed for industrialization in Taiwan and South Korea, and they were also an important source of technology licenses.
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Soon, Taiwan began to establish postal, trade, air and shipping links. The small country retained a high degree of autonomy as a special administrative region, including maintaining its own armed forces. Taiwan’s social and economic system remained unshakable and the country began to maintain its own foreign economic and cultural relations. Taiwanese investment and trade expanded and the government worked diligently to restrict and regulate it to keep the flight of capital in the country and within limits (van Kemenade, 113) Taiwan is the richest and most successful exile country in the world. Its population and economy are larger than those of the great majority of member states of the United Nations. Taiwan’s population has now grown to 21 million people, 85 percent of whom are native Taiwanese. The other 15 percent of the population is greatly comprised of refugees from China – of the two million escaping Communism of China (van Kemenade, 385).
Taiwan is anti-Communist, and follows economic policies backed by socialism. Taiwanese government created reforms of land, large state enterprises, active regulation by the government of income disparities, high rates of saving, far-reaching government protection and support, all to benefit its native citizens. The Multinational Corporations that were introduced to the country, largely through China, assisted in creating jobs for citizens, while providing education and developmental reform. Taiwan even developed and educational policy that encouraged an annual growth of nine to ten percent, that gave the highest priority to training top technocrats. The United States aided Taiwan by giving them a direction for growth and providing an alternative to living in China with its communist policies that issued more state control, egalitarianism and eventually resulted in repression.
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Author Willem van Kemenade describes Taiwan with a mix of positive and negative elements:
“chaotic, ugly, polluted cities, but with unprecedented dynamism and prosperity; a colorful, tolerant society full of friendly, civilized people – in Chinese you jen-ch’ing-wei (traditional human warmth) which has been completely destroyed on the mainland (China) by decades of class struggle and political campaigns.”
In 1804, local forces defeated an army deployed by Napoleon Bonaparte, established independence from France, and renamed the area Haiti. The defeat of the French in Haiti is widely credited with contributing to Napoleon’s decision to sell the Louisiana territory to the United States in 1804. Haiti is the world’s oldest black republic and the second-oldest republic after the United States in the Western Hemisphere. Haitians actively assisted the American Revolution and independence movements of Latin American countries. Two separate regimes (north and south) emerged after independence but were unified in 1820. Two years later, Haiti conquered Santo Domingo, the eastern, Spanish-speaking portion of Hispaniola. In 1844, however, Santo Domingo broke away from Haiti and became the Dominican Republic. With 22 changes of government from 1843 until 1915, Haiti experienced numerous periods of intense political and economic disorder, prompting United States military intervention in 1915. Haiti could not pay back its debs and the Mrines storemd the island to secure its gold when payment deadlines were not met (Delamaide, 100).
U.S. military forces were withdrawn in 1934 at the request of the elected Government of Haiti. From 1986–when the 30-year dictatorship of the Duvalier family ended–until 1991, Haiti was ruled by a series of provisional governments. In 1987, a constitution was adopted that provides for an elected bicameral parliament, an elected president who serves as head of state, and a prime minister, cabinet of ministers, and supreme court appointed by the president with Parliament’s consent. The Haitian Constitution also provides for the election of mayors and administrative bodies responsible for local government. Now, Haiti is the Western Hemisphere’s poorest country and among the 30 poorest in the world. Seventy-five percent of the people fall below the World Bank’s absolute poverty level. It is overpopulated. Haiti lacks communications, cheap power and raw materials for industry. Its mountainous terrain cannot provide a living for its rural population. Haiti’s economic reform agenda includes trade/tariff liberalization, modernization (understood to mean privatization) of state-owned enterprises, measures to control government expenditure and increase tax revenues, civil service downsizing, and financial sector reform.
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Structural adjustment agreements with the International Monetary Fund, World Bank, Inter-American Development Bank, and other international financial institutions are aimed at creating necessary conditions for private sector growth. Much of the population expected more immediate results from tough reforms External aid is essential to Haiti’s future economic development. Haiti is the least-developed country in the Western Hemisphere and one of the poorest in the world. Comparisons of social and economic indicators show that Haiti has been falling behind other low-income developing countries (particularly in the hemisphere) since the 1980s. Haiti’s economic stagnation is the result of earlier inappropriate economic policies, political instability, a shortage of good arable land, environmental deterioration, continued use of traditional technologies, under-capitalization, migration of large portions of the skilled population, and a weak national savings rate. Private domestic and foreign investment has been slow to return to Haiti. The investor community is concerned about political conditions and economic reform. International financial institutions and donor agencies have committed substantial sums to assist Haiti in restoring and expanding its physical infrastructure.
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High domestic interest rates and poorly developed internal capital markets are other factors restraining economic performance. Industry and commerce is limited, and heavily concentrated in Port-au-Prince. Vegetable oils, footwear and metal goods are still produced for domestic consumption. Manufactured goods make up two thirds of total exports. Torusim all but disappeared in the 1980’s, at first because of a scare about AIDS, then because of the political instability. Many hotels were also forced to closed. The Social Implications – Haiti’s Poverty Level The Haitians are almost wholly black, with a culture that is a unique mixture of African and French influences.
According to UNICEF, the literacy rate is only 45 percenty, while only 20 percent of children reach secondary school. Although public education is free, private and parochial schools provide perhaps 75% of educational programs offered. Only 63% of those enrolled will complete primary school; on average, it takes 16 years to produce a single graduate of the six-year cycle. Though Haitians place a high value on education, most families cannot afford to send their children to secondary school. One of the primary economic problems for many families, is the chronic low agricultural productivity, compounded by low world commodity prices. The average farm size is less that one acre. Only a third of the land is arable, yet most of the people live in the country, using rudimentary tools to grow corn, rice, sorghum and coffee.
Agriculture generates 32 percent of the GDP buy employs more than half the workforce. A land reform program was begun in 1997 in the Artibonite Valley to give land to families in an area where violent land disputes had become common. Agriculture was badly hit by a drought in the northwest in 1997, devastating families, causing famine in that area. One percent of the population controls nearly 40 percent of all of Haiti’s wealth. As political stability increases in Haiti, tourism could take its place next to export-oriented manufacturing as a potential source of foreign exchange. Remittances from abroad now constitute a significant source of financial support for many Haitian households. Workers in Haiti are guaranteed the right of association, and trade-organizing activities are protected by the labor code. A legal minimum wage of 36 gourdes a day (approximately $2.25) applies to most workers in the formal sector. The only areas that Haitians seem to benefit from were contraband and drug smuggling (56 kilograms of cocaine passed through Haiti in 1992, 157 kilograms in 1993 and 716 kilograms in 1994).
In 1998, a record of 685 kilograms was seized in two weeks from air passengers arriving from Panama. Author Susan George examines the idea of social classes and how the gulf is far between Latin American countries. Panama, for example, enjoys a comfortable $2,200 GNP per capita while little Haiti sits at $320 (George, 119).
She also notes that the terms “filthy rich” and “dirt poor” can be used to describe the economic situations of Latin American countries.