Automotive Wire Harness Trade for Haitian Development

Abstract

A piece of legislation extended since 1983 grants tariff free exports of automotive wire harnesses from Haiti to the United States. A log-log gravity model is used to determine if the legislation would be of benefit to Haiti. The resulting estimate shows Haiti is very unlikely to gain from the legislation due to its poor infrastructure and lack of ability to trade with ease. However, problems from the observations without trade cause concerns over the reliability of the OLS version of the gravity model. A zero inflated Poisson and a zero inflated Negative Binomial are used to investigate the reasonableness of the legislation, and the OLS Gravity model. The legislation, however, does not appear to give much assistance to developing Haiti.