Small Farms, Large Transaction Costs: Haiti’s Missing Sugar

Abstract

In the eighteenth century, Haiti was the world’s leading sugar producer, but when cane surged in the Caribbean in the early twentieth century, Haiti produced none. Instead, the land sat idle while workers emigrated to work on sugar plantations. I examine the hypothesis that historical property rights institutions created high transaction costs for converting land to cane production. I collect new data on land-use from 1928–1950 and a proxy for transaction costs. The evidence suggests transaction costs impeded the land market from responding to the sugar boom.

State Capacity, Property Rights, and External Revenues: Haiti, 1932–1949

“…8 Although the government failed to adequately provide aid through its refugee camps, the camps were not the only form of aid the refugees relied on. The refugees also applied for properties under the rental program (Palsson 2021). This demand for property will help test the state's legal capacity.…”

“…But its dependence on customs might also have inhibited Haiti’s legal capacity. The government of Haiti does not provide clear or complete rights to its many propertyholders (Lundahl 1980; Palsson 2021), and obtaining clear title to land is a burdensome process (De Soto 2000, p. 21). Its low legal capacity, I argue, was also influenced by its reliance on external revenues.…”

“…This paper provides new empirical evidence on impediments to improving legal capacity. We know a lot about the effects of legal capacity and property rights protections-secure rights affect investment in the property (Hornbeck 2010;Galiani and Schargrodsky 2010;Libecap and Lueck 2011) and whether the property itself and other resources are employed in their most productive use (Chari et al 2020;Field 2007;Agyei-Holmes et al 2020;Palsson 2021). With so much evidence that improving property rights can bring large economic benefits, we need a better understanding of why states do not invest in legal capacity.…”

Does Title Increase Large Farm Productivity? Institutional Determinants of Large Land-Based Investments' Performance in Zambia

“…Moreover, beyond rental, registries to support active sales markets that allow liquidation of land pledged as collateral are needed for credit markets to provide resources for investment by productive farms. Beyond regulatory change to allow cost reductions through use of technology, digital service delivery, appropriate standards, and elimination of rents, reducing the cost of land market transfers may thus require more rather than less public sector involvement (Palsson 2021).…”