Haiti vs. Dominican Republic

Haiti is a free market economy with low labor costs and tariff-free access to the US for many of its exports. Two-fifths of all Haitians depend on the agricultural sector, mainly small-scale subsistence farming, which remains vulnerable to damage from frequent natural disasters. Poverty, corruption, vulnerability to natural disasters, and low levels of education for much of the population represent some of the most serious impediments to Haiti's economic growth. Remittances are the primary source of foreign exchange, equivalent to more than a quarter of GDP, and nearly double the combined value of Haitian exports and foreign direct investment.

Currently the poorest country in the Western Hemisphere, with close to 60% of the population living under the national poverty line, Haiti's GDP growth rose to 5.5% in 2011 as the Haitian economy began recovering from the devastating January 2010 earthquake that destroyed much of its capital city, Port-au-Prince, and neighboring areas. However, growth slowed to below 2% in 2015 and 2016 as political uncertainty, drought conditions, decreasing foreign aid, and the depreciation of the national currency took a toll on investment and economic growth. Hurricane Matthew, the fiercest Caribbean storm in nearly a decade, made landfall in Haiti on 4 October 2016, with 140 mile-per-hour winds, creating a new humanitarian emergency. An estimated 2.1 million people were affected by the category 4 storm, which caused extensive damage to crops, houses, livestock, and infrastructure across Haiti's southern peninsula.

US economic engagement under the Caribbean Basin Trade Partnership Act (CBTPA) and the 2008 Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE II) have contributed to an increase in apparel exports and investment by providing duty-free access to the US. The Haiti Economic Lift Program (HELP) Act of 2010 extended the CBTPA and HOPE II until 2020, while the Trade Preferences Extension Act of 2015 extended trade benefits provided to Haiti in the HOPE and HELP Acts through September 2025. Apparel sector exports in 2016 reached approximately $850 million and account for over 90% of Haitian exports and more than 10% of the GDP.

Investment in Haiti is hampered by the difficulty of doing business and weak infrastructure, including access to electricity. Haiti's outstanding external debt was cancelled by donor countries following the 2010 earthquake, but has since risen to $2.6 billion as of December 2017, the majority of which is owed to Venezuela under the PetroCaribe program. Although the government has increased its revenue collection, it continues to rely on formal international economic assistance for fiscal sustainability, with over 20% of its annual budget coming from foreign aid or direct budget support.

The Dominican Republic was for most of its history primarily an exporter of sugar, coffee, and tobacco, but over the last three decades the economy has become more diversified as the service sector has overtaken agriculture as the economy's largest employer, due to growth in construction, tourism, and free trade zones. The mining sector has also played a greater role in the export market since late 2012 with the commencement of the extraction phase of the Pueblo Viejo Gold and Silver mine, one of the largest gold mines in the world.

For the last 20 years, the Dominican Republic has been one of the fastest growing economies in Latin America. The economy rebounded from the global recession in 2010-16, and the fiscal situation is improving. A tax reform package passed in November 2012, a reduction in government spending, and lower energy costs helped to narrow the central government budget deficit from 6.6% of GDP in 2012 to 2.6% in 2016, and public debt is declining. Marked income inequality, high unemployment, and underemployment remain important long-term challenges; the poorest half of the population receives less than one-fifth of GDP, while the richest 10% enjoys nearly 40% of GDP.

The economy is highly dependent upon the US, the destination for approximately half of exports and the source of 40% of imports. Remittances from the US amount to about 7% of GDP, equivalent to about a third of exports and two-thirds of tourism receipts. The Central America-Dominican Republic Free Trade Agreement came into force in March 2007, boosting investment and manufacturing exports.