Business is booming for suppliers of basic materials, food and medical supplies. Due to the earthquake disaster in Haiti, businesses around the world are seeing huge spikes in sales thanks to relief funds coming from the around the world. Rebuilding infrastructure is a significant component to disaster relief, but so is rebuilding local economies.
Haiti is on its proverbial knees as it regains footing due to the disaster. The funds and support that have come to the country are of great relief to the affected groups, but there are some downsides to the supplies being shipped into the country. Local merchants have quickly realized that the impact of disaster relief is adverse to their ongoing operations. In fact, according to an article in the Wall Street Journal, only 5% of disaster relief funds are spent in the country where the disaster occurs.
According to statistics provided by a non-profit operating in Haiti, for every dollar spent in a disaster area, that dollar is spent twice, thereby spurring on economic growth. How do the relief providers feel about the fact that the impact of their supplies can adversely affect the overall economic welfare of the country? In Haiti, the United States has acknowledge that this can temporarily hurt the economy, but says that it strives to move to local suppliers as quickly as possible.
The fact of the matter is, there is no good answer to this challenge. People who are in need, have significant urgency that can’t always be met by the local suppliers. However, the local suppliers many times just need a few weeks to get back to full operations, but upon reentrance into the market, struggle with a more competitive environment.
All in all, disaster relief is not optional. It is a social imperative for countries around the world to help and do so in the most efficient manner possible to save lives. Unfortunately, that can hurt economies in the short-term. In this case, Haiti is a country whose condition was in a state of disarray before the disaster. If anything, the disaster relief may end up helping the overall state of the country in the long-term.