Summary Of Jaramillo And Sancak

Summary of Jaramillo and Sancak 2007
“Growth in the Dominican Republic and Haiti: Why has the Grass Been Greener on One Side of Hispaniola”


Research Question: Why has the Dominican Republicfared so much better that Haiti in the past fifty years or so, if in fact, both countries have comparable geographic features, and historical institutions? Indeed, the authors suggest that both countriespresent a quasi-experiment.

Context: In 1960, the Dominican Republic and Haiti had the same per capita real GDP at just below US$800. However, by 2005, the Dominican Republic’s per capita real GDPhad tripled to about US$2,500, whereas that of Haiti had halved to US$430. Accordingly, the Dominican Republic and Haiti have been at opposite ends of the spectrum within Latin America and theCaribbean in terms of growth rates over the past 50 years, with the Dominican Republic achieving one of the highest average real GDP growth rates at above 5 percent and Haiti the lowest at about 1 percent.Test Hypothesis: Whether the divergence in output performance can be explained by specific policy decisions and external conditions that have shaped economic outcomes in both countries.Alternative Hypotheses: Initial conditions can explain such divergence in economic outcomes. The authors contest previous research[1] exploring whether geography, population density, historical institutions,and ethnolinguistic fragmentation may be the underlying factors of the country’s different paths. They find that there were strong similarities and that initial conditions fail to explaincross-country real income variation.

Methodology: A combination of empirical approaches including a fitted version of standard growth accounting, panel regressions, and case studies. The per capita GDP gapbetween the two countries on 10-year period averages (60s, 70s, 80s, 90s) is taken as dependent variable, while a whole set of explanatory variables are constructed so as to test why there has been...