Barbados, Jamaica, institutions, and a great reason for a research trip

  There is a debate inside the economics profession about the importance of institutions, broadly defined.  One side of the battle holds that institutions are everything.  Countries can institute all sorts of bad policies and still prosper over the long run if they have “good” institutions — France is a common example.  A subset of this group likes to argue that a particular set of legal institutions is very important.  You can sum their argument up as “Common law good, civil law bad.” 

The “institutions as epiphenomena” side of the debate has mostly given up, with the valiant exception of Greg Clark.  That said, strong opposition still exists in the form of two arguments: “institutions aren't everything” and its subset, “legal origin theory is total b@ll$#/t.”

One obvious experimental laboratory is the British West Indies.  Not a whole lot of good came out of the collapse of the West Indian Federation, but one bit of lemonade coming out of that lemon was that it left us with a collection of independent and quasi-independent states with a similar institutional background.  Now come two authors with a comparative paper on Barbados and Jamaica, arguing that it is macroeconomic policy, not the legacy of history, that explains the different paths of the two nations since independence. 

Are their arguments convincing?  More below the fold.

The authors argue that the two islands have three things in common and one difference.  First, they were both islands populated mostly by slaves taken from Africa.  Second, they have both been parliamentary democracies with the full panoply of civil rights since independence.  Third, they both constitutionally protect private property.  The difference, they argue, is that Barbados managed the macroeconomy well while subsequent Jamaican governments cocked it up.

The problem is that Jamaica and Barbados are not that similar.  First, Barbados had a parliamentary democracy (with way limited franchise, but still) from 1639 onward.  Jamaica, on the other hand, suspended its parliament in 1866, after the Morant Bay Rebellion.  It wasn't re-established until 1944.  Barbados and Jamaica both received universal male suffrage around the same time (in fact, Barbados didn't institute it until 1951), but one country had a long history of self-government and the other did not.

Second, Jamaica had a long history of slave and popular revolt, and a long history of having British rulers use the free population to violently suppress them.  As a result, the writ of the state never ran as deep as it did on Barbados:  the free colonies of the interior, for example, never really came under the rule of law. 

Finally, Jamaica lacked a middle class as prominent as Barbados's.  This was for two reasons.  First, Jamaica had a smaller white population.  Given that sad fact in all the Anglo countries of this hemisphere that white people enjoyed far greater opportunities to accumulate human capital than black people, this meant that Jamaica's middle class was proportionately smaller and less skilled.  Second, the construction of the Panama Canal catalyzed a small but very prominent black middle class in Barbados.  This difference had real effects in the two countries.  For example, in 1960 real primary school teacher salaries in Barbados were 31% higher than in Jamaica, educational spending as a % of GDP was 52% higher, and real per student primary school spending was 2.3 times higher.

I don't know which, if any, of these differences played a role in the subsequent divergence between the two islands' economic performance, but I suspect that they mean that the two places do not make as good a controlled experiment as the authors of the paper might hope.

Thoughts?

Comments

[Peter]

The fact that Jamaica has more than ten times the population of Barbados surely must have some relevance to their different development patterns.

[Noel Maurer]

Why? I don't understand.

Jamaica has a lower population density than Barbados. (640 people per sq. mile versus 1,810.) Both countries are net food importers, but Barbados much more so than Jamaica.

As for the effect of population per se, the only argument that I can think of pushes in the direction of a larger population being better for economic growth. A larger local market means more room for specialization and economies of scale in the domestic service sector, and thus more opportunities for efficiency gains. I don't think that's a particularly strong argument in favor of the hypothesis that a larger population is better for growth, to be honest ... but I can't think of any arguments as to why a larger local population (normalized for natural resources) would be worse for growth.

Around the world, of course, there is no evidence that smaller countries grow faster than larger ones. Viz, China in East Asia(fastest and big) and Panama in this hemisphere (fastest non-oil and tiny).

I honestly don't understand why Jamaica's larger population would be a factor in the country's slower growth.

[Dave MB]

I've been to Barbados but not Jamaica. Aren't the land-use patterns rather different? Barbados was mostly cane fields for most of its history, though the town of Bridgetown has now grown to cover a sizable fraction of the land area. There isn't much of a hinterland, unlike Jamaica which has sizable mountains. Relative to most other West Indies islands of comparable size, Barbados has much more arable land because it's not a volcano. In a practical sense it's smaller, with better internal communications -- might this have made it easier to govern?

[Peter]

Dave MB sort of beat me to it. As a physically small country, more like a city-state, where it's likely that everybody knows everybody else, Barbados is easier to govern than a much larger and diverse place like Jamaica.

[Randy McDonald]

"As a physically small country, more like a city-state, where it's likely that everybody knows everybody else, Barbados is easier to govern than a much larger and diverse place like Jamaica."

Speaking from personal experience, while Prince Edward Island's small size does mean that the political class is well-known, often at a personal level, by the masses, this doesn't necessarily translate into better governance. The Island's political scandal du jour before last had to do with the government's new-found determination to hire people based on their skill sets, not on their voting records. If anything, Barbados' small size relative to Jamaica might disadvantage it, at least insofar as economically wasteful corruption and patronage is concerned.

[J.H.]

Stumbled across this old post and reading through I began to wonder.....if Barbados and Jamaica do not make as good a controlled experiment as the authors would have liked which sets of countries in the former British West Indies would?

The Bahamas have had an elected legislature since 1666 and so could be somewhat comparable to Barbados, but they didn't get universal adult suffrage until the 1960s (1962 officially, but gerrymandering prevented it from being effective and giving majority rule until 1967).

Guyana had an elected majority in their Legislative Council from 1943 and had universal adult suffrage from 1953, but otherwise it has developed quite differently, with the country now being populated by the descendants of African slaves and Indian indentured servants (unlike Barbados or Jamaica) and no longer retaining the same type of parliamentary system as much of the rest of the West Indies.

Belize has the same type of parliamentary system as much of the rest of the West Indies and gained an elected majority in the legislative assembly and universal adult suffrage in 1954 (a two-chamber parliament came about in 1964), but its population is quite diverse.

Trinidad and Tobago has a similar parliamentary system (though a republic) had a elected majority in its legislative council in 1941 and universal adult suffrage in 1945. But again here, the population is like Guyana's in being a mix of African and Indian.

Of the rest of the West Indies, the populations are like Jamaica and Barbados in being mostly descended from African slaves and the parliamentary system in the rest is very similar to that of Jamaica and Barbados (with the minor exception of Dominica being a republic, but even then the system is mostly the same there). Most have had elected members in legislative councils since around 1924-1925 (similar to Trinidad), but elected majorities and universal adult suffrage came at different times:

Antigua/Barbuda - 1937 elected majority; 1951 universal adult suffrage

Dominica - 1936 elected majority; 1951 universal adult suffrage

Grenada - 1951 elected majority; 1951 universal adult suffrage

St. Kitts/Nevis (with Anguilla at the time) - 1952 elected majority; 1952 universal adult suffrage

St. Lucia - 1951 elected majority; 1951 universal adult suffrage

St. Vincent - 1951 elected majority; 1951 universal adult suffrage

The writ of the state in some of these islands also did not run as deep as in Barbados because, like Jamaica, they are pretty mountainous.

Many have also had a history of revolt and repression (even Barbados had such revolts though it differed in having them mainly in the 1600s and only once since then in 1816). Dominica and St. Vincent also had maroon communities like Jamaica.

Might it not be possibly to compare the differing paths of macroeconomic policies and growth since 1950 of say, St. Kitts/Antigua/St. Vincent/Dominica/Grenada on the one hand with Jamaica on the other hand in a more controlled sense, like the authors of the paper hoped to do with Barbados and Jamaica?

P.S. I think there is an error in this post when it notes that Jamaica's parliamentary system wasn't re-established until 1944. The 1944 re-introduced a fully elected House of Representatives, but prior to that elected members had been a part of (and usually the great majority of) the Legislative Council since 1884 and the Legislative Council itself had some responsibility over financial affairs. The 1944 Constitution reverted the Legislative Council to being an entirely unelected body as it had been between 1866 and 1884, making it into the second chamber of parliament and precursor to the Senate.