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Article Artículo

Economic Growth

Parting Ways with the Pessimists

The economists who predicted the housing crisis tend to be a gloomy bunch, as Adam Davidson notes in his latest New York Times Magazine column. Dean Baker is the rare exception. In the following guest post on NPR's Planet Money blog, he explains why he has parted ways with the economic pessimists.

For more than five years before the recession began in December of 2007, I was one of the leading economic pessimists, warning of the housing bubble and the damage that its collapse would do to the economy. I based this pessimism on my analysis of the housing market, not a genetic disposition to pessimism. Given the economy's current situation, I find the warnings of the pessimists – the double-dip gang – to be wrongheaded and seriously counterproductive.

First to the economy's near-term prospects: the economy is growing and will in all probability continue to grow. Economies do generally grow. We see new investment, leading to more employment and higher productivity, which leads to higher profits and higher wages.

In the past when the economy has fallen into a recession it has been the result of plunges in house sales and car sales. Neither possibility seems plausible at the moment, primarily because both remain at extraordinarily low levels that leave little room for them to fall further. Even if they did fall, it would have only a limited impact since current demand is already so depressed.

Dean Baker / February 06, 2012

Article Artículo

PDT Survey Looks at Efforts to Improve and Increase Local Procurement
Peace Dividend Trust (PDT), an organization that has been in Haiti since 2009, released a study last week (PDF) on the construction sector in Haiti based on surveys with both procurement officers of international organizations and Haitian businesses. PDT created the Peace Dividend Marketplace in 2009, to help facilitate the use of local businesses. Their local business directory now contains hundreds of companies. PDT’s website states that, “its objective is to help create jobs and inspire long-term economic growth and stability in Haiti by encouraging the international community to use locally available goods and services to carry out their project work.”

The surveys reveal that while many Haitian businesses have won contracts or subcontracts since the earthquake, many others have been left out. There is also a severe disconnect in many areas between local contractors and international organizations.  While procurement officers were generally supportive of local procurement, the report does not, as the authors point out, provide an idea of the actual level of local procurement taking place since the respondents were primarily organizations that had used the PDT marketplace previously. Explaining this bias the report states, “PDT is a well-known advocate for local procurement in Port-au-Prince, hence those that were willing to take part in a survey from PDT are more likely to support local procurement themselves.”

PDT interviewed 303 Haitian construction companies and while the percentage of those that received a contract from an international organization increased from 25 percent to 45 percent since the earthquake, many reported feeling excluded from the contracting process. For instance, the survey found that “[a]pproximately 43% of the Haitian businesses surveyed believed that international organisations were neither good nor bad for the economy. Eleven per cent even stated that international organisations do the Haitian economy more harm than good.” Only half of Haitian companies believed international organizations were interested in working with local companies. PDT is advocating for a “Haiti First” policy, “in which both the Government of Haiti and the international community agree to procure locally as often as possible and adopt recognised best practices that ensure maximum development impact from local procurement.”

Interestingly, despite their professed preference for local businesses, 67 percent of procurement officers interviewed “do not believe the local market can deliver technical work to the required quality without high levels of supervision and guidance.”

Jake Johnston / February 02, 2012