Attempts at import-substitution manufacturing gave most local factories generous import protection from the 1970s to the mid-1980s, thereby insulating them from foreign competition. Industries of this kind produced paper, matches, cardboard, footwear, leather, food products, beverages, rubber, plastics, metals, building materials, textiles, cigarettes, soap, beer, and other basic goods. Most local factories were small or medium in size. Some very small producers demonstrated incredible ingenuity in transforming virtual junk into usable goods, but the limited domestic market and the weak purchasing power of most Haitians severely limited economies of scale, forcing most enterprises to function inefficiently and below capacity. A handful of local manufacturers, who produced rum, paints, essential oils, leather, and handicrafts, were able to expand their businesses through exports. Haitian rum was of exceptional quality, as were the country's handicrafts. Nongovernmental organizations were particularly active in marketing handicrafts in the United States and Europe.
In 1986 the CNG enacted broad import-liberalization policies and abolished long-standing import protection, forcing local producers to compete internationally. As a consequence, domestic manufacturing, already hampered by competition with lower-priced goods smuggled into Haiti from the Dominican Republic, experienced a painful transition in the late 1980s. Many manufacturers closed their doors.
The other major manufacturing subsector was large-scale production by state-owned enterprises of items such as vegetable oils, sugar, flour, and cement. From 1980 to 1985, the government either built, or bought, a majority share in five of the country's largest manufacturing companies. As the losses of these inefficient parastatals mounted, reaching more than 4 percent of GDP from 1982 to 1985, international lenders increasingly pressured the government to divest its interests in these ventures, a process that began after 1986.
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