Haiti vs. the Dominican Republic
The countries of Haiti and the Dominican Republic together form the island of Hispaniola in the Caribbean. Haiti comprises roughly the western third of the island, while the D.R. makes up the eastern two-thirds.
The economic divergence between these two countries is one of the most remarkable in the world, perhaps surpassed only by North and South Korea. As recently as 1960, the two countries had similar standards of living. Today, the D.R., by some measures, is eight times as rich as Haiti, while Haiti’s standard of living hasn’t advanced at all since 1950.
The D.R. has already surpassed Brazil and Colombia; if Covid doesn’t knock it off its growth trend, it’ll soon pass Mexico and Argentina.
What explains this incredible divergence? The short answer is that no one exactly knows for sure; the causes of economic development are complex, and there are lots of big theories with very little empirical proof. We know a few correlates of development, but these generally fall short of full explanations. And most of these factors are things that themselves require explanations — for example, low inflation tends to correlate with economic growth, but what explains low inflation? Maybe there are deep institutional or historical or cultural or geographic or other factors leading to inflation, or maybe it was just a random policy choice by the right central banker.
The reason it’s interesting to look at this pair of countries is that there are lots of factors that are basically controlled for. Haiti and the D.R. share the same geography. Both began as colonies of European powers not known for establishing high-quality institutions (France for Haiti, Spain for the D.R.). And so on. This doesn’t make the question of their relative performance simple, but it does make it slightly less hideously complex.
