Haiti marks a grim anniversary this month: It's been one year since a catastrophic earthquake struck the island nation, leveling whole neighborhoods of the capital city of Port-au-Prince and killing upwards of 230,000 people. Twelve months later, much of the rebuilding and recovery remains undone. Only 40 percent of the rubble in Port-au-Prince is scheduled to be cleared by next August, complained former U.S. President Bill Clinton, the United Nations' special envoy to Haiti, at a recent meeting of the Interim Haiti Recovery Commission. But it is not too early to ask what the long-term impact of the quake will be on the development prospects of the Caribbean's most troubled country. The answer -- for good and ill -- is likely to be "not much."
This is not to say, of course, that the earthquake wasn't an immense human tragedy. In absolute terms it was by far the largest natural disaster of the last several decades. According to research by Eduardo Cavallo and his colleagues at the Inter-American Development Bank, the most catastrophic natural disaster between 1970 and 2008 -- measured in deaths as a percentage of country population -- was Nicaragua's 1972 earthquake, in which four out of every 1,000 Nicaraguans died. The death toll from the Haiti earthquake was five times that -- and 3,000 times the per capita toll that Hurricane Katrina took on the United States.
Initial estimates suggested that in the short term, this tragic human loss would be an economic one as well, costing the country as much as $8 billion in terms of lost infrastructure -- equal to about 120 percent of the country's gross domestic product (GDP). But in the long term, this economic impact could be far more muted, if history is any guide. Cavallo's analysis of previous catastrophes suggests that economic performance of countries in the decade after a natural disaster is indistinguishable from that of countries that didn't suffer comparable misfortunes. Even for countries suffering the largest earthquakes, floods, and hurricanes, Cavallo found, GDP per capita was the same three, five or 10 years after the disaster -- as it would had there been no disaster at all.
Cavallo's study jibes with what we know about the long-term impact of wars on economic performance. For example, by 1960 Germany was back to where you'd expect its income to be based on long-term growth trends from 1850 to 1910 -- two World Wars and the Great Depression notwithstanding. All the bombing that the United States carried out on Japan in World War II didn't alter city growth in the country over the medium run. And University of California, Berkeley, economists Edward Miguel and Gérard Roland argue that the American bombing of Vietnam -- which totaled 7.5 million tons of explosives -- hasn't impacted long-run performance in that country, either.
That's because the things that determine long-term growth can't be blown up. It isn't factories or schools, or even individual people. Mounting cross-country evidence suggests that what separates poor countries from rich is differing paths of institutional development.
But this isn't the best of news for Haiti. Indeed, the country's history involves virtually all the features that economists have correlated with weak institutions and slow growth over the long term, from its history of slavery and colonial rule to its post-independence succession of coups, U.S. invasion, and some of the Americas' worst dictatorial misrule under "Papa" and "Bébé Doc" Duvalier. The country's weak institutions were tragically on display in the aftermath of the earthquake. One reason the death toll was so high was that building and land-use codes were patchily written and almost completely unenforced -- so when the earthquake struck, buildings collapsed and slid down hillsides, trapping or killing those inside. In 2006, Transparency International declared Haiti the world's most corrupt country. Poor institutions of governance help to explain why, between 1950 and 2002, Haiti's average income actually fell, from $1,051 to $752 per capita. If, as it recovers from the earthquake, Haiti merely manages to stay as poor as it is today, that would count as an improvement.