Why is gdp per capita important
Why is Haiti so poor?
Haiti, located on the western part of the island of Hispaniola, is one of the poorest countries in the world. Its GDP per capita (at purchasing power parity) stands at about $1,241, merely 2.5 percent of US GDP per capita. Its neighbor on the island of Hispaniola, the Dominican Republic, is significantly richer, with GDP per capita of $9,289.
There has not been a shortage of explanations for the sorry state of Haiti’s economy. But most of them are fairly unsatisfactory. In his book Collapse . Jared Diamond attempted to explain Haiti’s poverty, in particular relative to the Dominican Republic, with geographic factors. He pointed out that the winds coming mostly from the east were blocked by high mountains, reducing rainfall for the Haitian part of the island. This combined with the lower soil quality and greater population density led to deforestation in Haiti, while the Dominican Republic maintained its forest cover and high-quality soil. (Diamond recognizes that this higher population density was the result of the plantation agriculture in Haiti based on the import of slaves, and also mentions other social and historical factors).
Even more popular than Diamond’s geographic explanation are cultural ones. Many commentators end up arguing that Haiti is poor because of its people. A recent book by Laurent Dubois, Haiti: the Aftershocks of History . is a useful corrective to these arguments. Dubois starts by recapping many of these arguments which go back centuries. For example, Victor Cochinat, a 19 th -century visitor from Martinique, stated (p. 1)
Haitians were lazy and ‘ashamed’ to work,…, which was why they were so poor. They spent too much money on rum.
Lest you think that these are the ramblings of an eccentric 19th-century explorer, Dubois shows how the same arguments are what gets traction today, writing (p. 3)
The day after the earthquake, televangelist Pat Robertson famously opined that Haitians were suffering because they had sold themselves to the devil. A more polite version of the same argument came from New York Times columnist David Brooks, who accused Haiti of having “progress-resistant cultural influences,” including “the influence of voodoo religion.”… Many called openly for Haiti to be made a protectorate. Brooks advocated “intrusive paternalism” that would change the local culture by promoting “No Excuses countercultures.”
The book makes a lively read, dispelling these notions, and firmly locating the roots of Haiti’s poverty in its history. Haiti was one of the most extractive colonies Europeans set up, with the majority of its population working as slaves in plantations for their French masters. (An estimate from 1789 puts the number of free people at 55,000 vs. 450,000 slaves; the free people included a significant number of “free people of color”). Haiti was a dystopic colony, based on terror and repression. Brutal punishments and institutions were common for the most minor of offenses, and slaves died at staggering rates, with perhaps 10% of the slave population dying of disease, overwork and other causes.
Haitians shocked the world with a formidable slave revolt in 1791, ultimately leading to independence from France. But this revolt did not lead to the development of inclusive institutions. To start with, the fight against the French, who attempted to retake their prize colony several times, was protracted and costly. Dubois, for example, argues that the fiscal needs imposed by this continued war
made the abolition of slavery essentially impossible. It probably also stunted the subsequent political development of this new independent state by excessively militarizing its politics. But perhaps more important was the vicious circle of extractive institutions. There were insufficient constraints on the power of post-independence leaders such as Dessalines, Christoph, or Petion, who set themselves up as the elite exploiting Haiti’s people through very much the same means as the French had done earlier (and this does not receive sufficient emphasis from Dubois who is somewhat more lenient towards the misdeeds by Haiti’s early leaders than those of its colonial masters and later politicians).
Dubois shows how the early post-independence history of Haiti shaped its later politics, in particular, opening the way to Duvaliers’ extractive rule and to the subsequent chaos.
He is equally critical of the international aid community. He cites the argument of Ricardo Seitenfus, the Brazilian head of Organization of American States mission in the country during the 2010 earthquake, that the UN presence in Haiti was “wasteful and even harmful”. Seitenfus went further, arguing:
There is a malicious and perverse relationship between the force of NGOs and the weakness of the Haitian state.
Though Dubois’s book is informative and provocative, the big puzzle remains: Why Haiti, not Barbados or Jamaica or the Dominican Republic? The Dominican Republic is a natural comparison, being on the same island and sharing, like Barbados and Jamaica, its history of slavery (even if its intensity was less than that Haiti). But the most puzzling aspect of the whole thing is shown in the next figure.
At the end of World War II, Haiti and the Dominican Republic had essentially identical levels of income per capita. Thereafter, they diverged. Situations like this are common in world history. In 1800 the US was not much richer than Latin America in terms of measured incomes, but its underlying institutions were different and so was its potential. This only started to matter when the British Industrial Revolution completely changed what was economically possible. The US could and did take advantage, Latin America did not.
One hypothesis about the divergence between Haiti and the Dominican Republic is that a similar situation arose with Haiti and the Dominican Republic. Though the latter shared a history of slavery, dictatorship and US invasion, it did not suffer as much as Haiti. After 1930 Rafael Trujillo, head of the US created national guard, set himself up as dictator. He controlled the army and embarked on a path of extractive economic growth. As the world economy boomed after 1945, divergence set in. The Dominican Republic exported sugarcane and cigars; afterwards they developed a successful export processing zone. After Trujillo was assassinated in 1961, they managed an imperfect transition to more inclusive political institutions, sustaining the economic growth. Haiti was different, without such a strong state or political control of the army, the period after 1930 saw political instability not extractive growth and when François Duvalier (“Papa Doc”) came to power in 1957 he privatized violence using the ton ton macoutes to control the country, not the army. There was no extractive growth in Haiti, just anarchy.
All the same, this is just one hypothesis that fits the facts, the divergence between the two halves of the island of Hispaniola remains a major puzzle.
Tuesday, April 3, 2012 Source: whynationsfail.com