The Historical Context in which the Economies of Madagascar and New Zealand Developed

Intro – The Malagasy are the very strong willed, native residents of Madagascar. The Maori are the fierce native tribes of New Zealand. In the 1800’s both of these lands were overrun with tribal violence and nearly constant warfare. Neither society had progressed technologically past the wooden or rock weapons. Economies of scale were non-existent in either place. Now, over 200 years later, New Zealand is a very civilized country with an export-driven economy. While Madagascar, despite its economic potential, has a GDP per capita lower than $500 (world bank). Why is there such a huge disparity between the countries? The answer can be found by examining the how their separate political institutions have evolved. By contrasting how the two countries development since they were colonized we can begin to understand why New Zealand’s stability has fostered an environment for international investment and economic growth. While Madagascar’s inability to maintain stability in their government has led to very unstable economic conditions. The political institutions for both countries were defined by the countries that settled and colonized them. This paper will seek to help the reader understand the historical context in which both economies developed. With this background in place, it will be clear to see that political stability breeds an environment of trust among the people of a country, which allows for businesses to have low transaction costs and less corruption costs as well.

Madagascar became a trading post for both Britain and France in the early days of colonization, but it wasn’t until 1895 that the French established a colony officially in Madagascar. This was formally recognized by Britain and the trade relations that had beg...

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Changing times: a history of New Zealand since 1945 Jenny Carlyon, Diana Morrow http://www.content.eisa.org.za/old-page/madagascar-authoritarian-capitalism-1979-1993 http://www.treasury.govt.nz/economy/overview/2013/nzefo-13.pdf

http://www.heritage.org/index/country/madagascar