Nearly a year after officially opening, University Hospital in Mirebalais, Haiti, is proving to be a transformative force. Beyond the obvious impact of improved health outcomes, the hospital—the largest post-earthquake reconstruction project completed to date in Haiti’s public health sector—is a catalyst for economic development in one of the country’s least developed regions.

When fully staffed, University Hospital will provide more than 800 jobs for Haitians—Haitians who shop in local markets, invest in nearby housing, and grab lunch at neighborhood restaurants and food stands. New businesses and opportunities are cropping up—take for instance Linda Marçone, a mother of three who sells egg sandwiches. She recently moved her operations outside of University Hospital and is now selling dozens of sandwiches each morning.

This transformation isn’t a surprise. Investments in critical infrastructure, such as hospitals, spur development. To measure how large-scale private and public investments spill over onto a country’s various economic sectors, economists use what’s known as an input-output model.

PIH’s Monitoring, Evaluation and Quality team recently partnered with researchers from Haiti and the U.S. to apply an input-output model to University Hospital. “The idea behind the input-output approach is intuitively simple,” the researchers note in a working paper. Essentially, the influx of resources into some sectors of the economy—health care and teaching in the case of University Hospital—will affect other sectors of the economy through what is called the “multiplier effect.” This will result in an economic impact far greater than that of the original investment.

In this instance, the input is $16.2 million, the estimated annual, long-run, full-capacity operating cost of University Hospital. The output is a bit trickier.

Input-output models are country-specific. It makes sense—every nation has different economic sectors that are affected by countless variables. Gathering the data needed to build a proper input-output model is a massive undertaking that often involves extensive collaboration with Ministries of Finance and similar high-level stakeholders. No such model exists for Haiti. The researchers, however, did find a matrix developed for the Dominican Republic in 1991, which provides an “acceptable approximation” of Haiti’s’ economy today. It includes 32 different sectors, including livestock, forestry and fishing, rental housing, and commerce.

Using this model, the team found that a $16.2 million investment in University Hospital results in an overall economic impact on the Haitian economy of $29.4 million.

Using this model, the team found that a $16.2 million investment in University Hospital results in an overall economic impact on the Haitian economy of $29.4 million. Put another way, for every $1 invested in University Hospital, $1.82 is pushed into the Haitian economy. This multiplier effect includes things like the food the hospital buys from local farmers and the salaries paid to hospital staff. It also accounts for the food, books, or housing bought by the local farmers or the hospital staff with the money they received from the hospital.

To get a better grasp, let’s return to Linda Marçone, the woman who sells egg sandwiches outside University Hospital. The hospital pays staff, and they go and spend some of their money on breakfast at Marçone’s. As a result, Marçone has money in her pocket to support her immediate needs, and she has capital to continue purchasing more eggs and more bread from local farmers and bakeries. They in turn can invest in more chickens and new equipment.

One of the most profound benefits of the 300-bed University Hospital is that it decentralizes Haiti’s health system away from Port-au-Prince. And as demonstrated in this paper, the hospital is decentralizing centers of economic activity away from the capital city, too. By employing Haitians and procuring locally as many supplies as possible, this transformation can be sustained and built upon.

PIH has been working in the Central Plateau for more than 25 years. University Hospital provides access to high-quality health for everyone who needs it. It is the training ground for Haiti’s next generation of doctors, and it is an engine of economic development. We couldn’t have built it without your partnership.

To read the working paper in full, please click here.

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