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September 01, 2008

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Burundi's _PPP adjusted_ pcGDP is under $400, and the average coffee farm is just over a hectare. By Burindian standards, your Chiapans were all rich! four times as much income, and farms five times as big!

I did the math? Twenty years of nonstop 8% GDP growth would bring Burundi to about where Kenya and Senegal are today.

Yeah, you can make yourself a little crazy here. I recently wrote to Carlos something like "on a good day, it's like standing in the Old South of sharecroppers, hookworm and Bilbo, and trying to imagine the Golden Triangle. On a bad day, it's like standing in the smoldering ruins of post-Sherman Atlanta and same."

The coffee sector here is a state-run monopsony /and I'm not even sure that's bad/. Burundi is so far down that the normal rules don't apply. I met a professor who'd been tracking import and export data against currency fluctuations for 30 years. His conclusion: the long decline of the Burundian franc had a *negative* correlation with import-export balance. The franc exchanges for 1/200 of what it did in the early 1980s, and as a result exports have... um, collapsed. (Imports have stayed roughly constant in real terms, though they've risen as a percentage of GDP.) Let's not even get into how interest rates, exchange rates and inflation interact, except to say that it resembles what we learned in Macro 101 not at all in any way whatsoever. It makes me think of... oh, modal arithmetic? Which has its own logic? Like, how 8 + 8 is 4, if you're counting around a clock -- you just have to realize, ohh kay, we're counting hours here?

I'm rambling. Will try to get in another post before I go.


Doug M.

Believe you me, I understand the confusion. Let me see if I can help.

I agree, Chiapans are rich compared to almost all Africans ... that was the point I was trying to make, but I'm not surprised that I failed to make it. (Or did I? Help, Doug.)

How much richer? We can't even begin to take a shot at that without more data. My Chiapan numbers are straight dollars, for a typical household size between four and five people.

The nominal per capita GDP in Burundi in 2003 was US$93. I don't know average household sizes, but I'll take a stab at six. 93 X 6 = US$ 561.

Sadly, that doesn't tell us anything, because we need to know average rural incomes. Any information on that?

I also wouldn't worry at all about the relationship between the real exchange rate and export volumes. In civil wars, exports can behave very differently than the macro variables would predict.

Do you have a camera? There is going to be a lot of information in a few random snaps of the capital.

No camera -- Claudia is the picture taker.

Yah, I got the point about Chiapas. I was agreeing/putting a gloss on it.

Exports: to a first approximation, it's coffee. (A second approximation would be coffee, tea, and beer. The one large industry is the Amstel factory, which supplies Burundi, Rwanda, and a fair chunk of the Congo with decent beer, and the Burundi government with about 30% of its total tax revenue.) So, yeah -- no matter how low the currency, at the end of the day things like productivity, quality, and international coffee prices are going to matter more.

I can't say much about average rural incomes here except to note that malnutrition is still a major problem in rural Burundi. Had a beer with a visiting US doctor the other day, and he said that in two weeks in a rural clinic he saw 20+ cases of kwashiorkor, mostly in kids. Other deficiency diseases are also endemic. So, incomes are low.


Doug M.

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