Measure Before You Fix

In a recent article published in these pages under the title “Inflationary Autarky,” I tried to show, with data and regressions to back it up, that ninety-two percent of the monthly pace of Haitian food inflation is not explained by the three external channels that the economic literature usually considers decisive: the price of oil, world food prices, and the exchange rate. In its section on policy levers, the article offered two foreign examples meant to illustrate possible ways out: the dismantling of South Africa’s bread cartel by the Competition Commission between 2007 and 2010, and the Dominican Republic’s Price Stabilization Institute (Instituto de Estabilización de Precios, INESPRE), created by Law 526 of 1969, which buys directly from producers and sells to consumers, bypassing intermediaries.

A discussion with the economist Carl-Henri Prophète raised a question that the article was not designed to address but that deserves to be asked in its own right. Prophète’s remark was simple and incisive: in neither the South African nor the Dominican case has the effect of these mechanisms on the retail prices paid by consumers been subjected to a rigorous impact evaluation. The Competition Commission fined the members of the bread cartel several hundred million rand, but no published study has measured whether the price of bread actually fell for South African consumers after the cartel was broken up. INESPRE has existed and operated for fifty-seven years, but no impact evaluation has isolated its specific effect on retail food prices in the Dominican Republic. We punish, we stabilize, we fix. But we do not measure.

The remark led me to a systematic search of the academic and institutional literature. What I found goes well beyond the Haitian case. In the food price policies of developing countries, there is a structural blind spot that the economics profession has been documenting for forty years without ever correcting it: the whole world intervenes on prices, and the whole world does so without checking whether its interventions produce the intended effect. This article explores that blind spot, its causes, its consequences, and a possible alternative.

1. The world intervenes without measuring

The diagnosis is not new. C. Peter Timmer, in a seminal paper published by the World Bank in 1989 under the title Food Price Policy: The Rationale for Government Intervention, already described the situation as a mix of ad hoc interventions meant to satisfy, all at once, farmers’ need for incentives, consumers’ need for low prices, the budget constraints imposed by finance ministers, and the powerful political desire for price stability as a visible sign of food security. Forty years later, the diagnosis still holds.

A World Bank working paper published in 2020 (Policy Research Working Paper 9212), under the unusually candid title Price Controls: Good Intentions, Bad Outcomes, finds that price controls are far more widespread in developing countries than in advanced economies, and that the available evidence suggests these controls often undermine growth, impose fiscal costs, and weaken the effectiveness of monetary policy. The study covers more than one hundred emerging and developing countries, and it documents the near-universality of price controls on energy and food products in these economies. What is striking about the paper is not its conclusion, which is to be expected. What is striking is the systematic absence of impact measurement in the national studies it reviews. Countries impose; they do not verify.

Christophe Gouel, in a 2013 working paper for the National Bureau of Economic Research (NBER Working Paper 18934) on food price volatility and stabilization policies in developing countries, explains why this absence of measurement persists. His argument fits in a single sentence that sums up forty years of food policy in poor countries: governments must be seen to act, and inaction is not an option. Pressed by urgency and without adequate preparation, they resort to costly policies such as universal food subsidies or trade restrictions, and no one comes back afterward to check. The political cycle moves on, the mechanism stays in place through inertia, and the question of effectiveness is never asked again.

An IMF survey published in 2022, covering 174 countries, confirms this reading by showing a clear correlation between the type of measure adopted and a country’s level of development: targeted cash transfers, which can be evaluated and adjusted, are typically used by advanced economies, while low-income countries rely more heavily on universal subsidies and price controls, instruments that are by nature harder to evaluate and more likely to produce lasting distortions.

2. The exception that proves the rule

Amid this evaluation vacuum, one study stands out for its rigor and for its geographical proximity to Haiti. It was, in fact, the basis for my reference to the Dominican Republic in “Inflationary Autarky.” The randomized evaluation by Mattias Busso and Sebastian Galiani, published in the American Economic Journal: Applied Economics in 2015, focused on Programa Solidaridad, the Dominican conditional cash transfer program. The Dominican government, concerned that the limited number of retailers taking part in the program allowed those retailers to raise prices and capture part of the resources intended for the poorest households, worked with the researchers to evaluate the effect of expanding the network of authorized stores. The experiment, conducted in 72 districts and covering 400 stores, produced a clear result: adding competing stores to the network reduced the prices of staple goods by about 2.6 percent, with no significant effect on product quality.

The result is modest in magnitude but considerable in its implications. It establishes, through a rigorous causal method (randomization), that competition does lower retail food prices in a Caribbean developing country. And it establishes, symmetrically, that restricting the number of retailers allows those retailers to capture part of the transfers intended for the poorest. The mechanism is exactly the one that “Inflationary Autarky” documents on a different scale for Haiti: when a small number of players control the food distribution chain without competitive constraint, cost reductions upstream are not passed on downstream.

The question this study forces us to ask is this: why is it one of the few of its kind in the region? INESPRE has been operating since 1969, more than half a century. South Africa’s Competition Commission imposed record fines on the bread cartel fifteen years ago. And in both cases, the most basic check, the one that would consist of measuring whether consumers actually pay less after the intervention, has not been done. Or at least it has not been published in a form that the academic community can examine and replicate.

3. Observe rather than fix: the emerging paradigm

There is an alternative to direct price control, and it is beginning to take shape where institutional capacity allows. In July 2024, the European Union launched an Agri-Food Chain Observatory whose mission is not to set prices, but to develop methodologies for assessing and monitoring the cost structure and the distribution of margins and value added along the food chain. The starting point of this initiative is an observation any economist will recognize: price information exists at the two ends of the chain (producer and consumer), but it is missing at the intermediate stages, where margins are formed. The European regulation on market transparency, adopted as early as 2019, explicitly noted that this missing intermediate information would particularly benefit small operators who have no access to such data through private sources.

The paradigm taking shape here is fundamentally different from price control. It does not seek to set the final price. It seeks to make price formation visible, link by link, from import to retail. Its wager is that transparency alone creates competitive and regulatory pressure that makes direct control unnecessary, or at least secondary. An importer whose published margin is four times that of a regional competitor faces a kind of pressure, that of public scrutiny and institutional arbitration, which silence makes impossible.

This paradigm has solid theoretical grounding. Stiglitz’s work on information asymmetry establishes that opaque markets structurally produce suboptimal outcomes, because the best-informed actors exploit their informational advantage at the expense of the least informed. Douglass North, in his work on institutions as reducers of transaction costs, shows that an institutional arrangement that reduces market opacity simultaneously lowers transaction costs for all participants and brings the market closer to its theoretical functioning. A margins observatory is, in North’s sense, an institution that reduces informational transaction costs. It does not replace the market. It makes it legible.

4. Haiti does not need an INESPRE. Haiti needs an observatory

“Inflationary Autarky” established that 92 percent of the monthly pace of Haitian food inflation is not explained by the standard external factors. If those factors do not account for the observed pace, then it must, to a large extent, be absorbed somewhere in the domestic intermediation chain. But the article could go no further, because the data needed to identify where, exactly, these margins are formed and who captures them simply do not exist in Haiti’s public domain. The observatory proposed here is the instrument that would produce those data.

Its mission would be precise and bounded: to document publicly, product by product and month by month, the gap between the CIF import price and the retail price paid by consumers, breaking down the intermediate items. Customs duties. Port fees. Wholesale margins. Domestic logistics costs. Retail margins. Each item identified, quantified, published. No price-setting, no subsidies, no decrees. Measurement, publication, transparency.

Three arguments favor this approach over the creation of a Dominican-style stabilization office. The first is empirical: direct price control has never been rigorously evaluated in a comparable context, as the preceding literature review has shown. The second is institutional: the Bank of the Republic of Haiti (BRH), the central bank, already has substantial technical capacity and partial access to the necessary data, through its banking supervision powers, which give it a view of the financial flows of importers handled by Haitian banks, and through its proximity to customs data. This access is not exhaustive: part of food import financing goes through letters of credit issued by foreign correspondent banks or through direct financing outside the local banking system, and the observatory will have to build bridges with customs and with regional banking counterparties to close that blind spot. But the existing base covers enough of the chain to allow an initial mapping of margins, to be filled out later. Carl-Henri Prophète, who headed the BRH’s macroeconomic analysis unit and then its economic analysis department, knows better than anyone that this capacity exists and has never been used for this purpose. The third argument is mechanical: publishing margins is in itself an instrument of discipline. It forces no one to cut prices. It simply makes it impossible to maintain, in silence, margins that only opacity protects.

This last point deserves elaboration. In a market where information circulates, an importer who buys a sack of rice at 800 gourdes FOB, pays 200 gourdes in duties and fees, and resells it wholesale at 1,800 gourdes leaves a visible margin of 800 gourdes that any potential competitor, any editorial writer, any member of parliament can name and debate. In a market where information does not circulate, that margin is invisible, and it will remain so as long as no one produces the data. The observatory fixes nothing. It illuminates. And in an oligopolistic market such as Haitian food importing, to illuminate is already to discipline.

5. You cannot discipline what you do not measure

“Inflationary Autarky” asked a question: where is Haitian food inflation formed if it no longer comes from outside? This article asks the question that comes immediately after: how are we to understand what happens in this domestic chain, which absorbs 92 percent of the pace of inflation without anyone being able to identify precisely where, and by whom?

The answer most developing countries offer is direct price control. The Dominican INESPRE, the West African cereal boards, the universal subsidies documented by the IMF in more than one hundred countries. The literature review shows that this answer is universal, and universally unevaluated. No one knows whether it works. And the fact that no one has known for fifty years should, in itself, be an alarm bell.

The alternative proposed here is both more modest and more ambitious. More modest, because it does not claim to set prices or to subsidize consumers. More ambitious, because it attacks the problem at its informational root: the opacity of the price-formation chain, which allows margins to build up and persist in silence. A margins observatory attached to the BRH, publicly documenting the gap between CIF and retail prices, product by product, month by month, would not solve Haitian food inflation. But it would produce the empirical base without which no future intervention can be calibrated, evaluated, or defended. And it would make visible, for the first time, what “Inflationary Autarky” could only quantify without locating.

You cannot discipline what you do not measure. And in Haiti, no one measures.

References: Timmer, C. P., “Food Price Policy: The Rationale for Government Intervention,” World Bank, 1989. Gouel, C., “Food Price Volatility and Domestic Stabilization Policies in Developing Countries,” NBER Working Paper 18934, 2013. World Bank, “Price Controls: Good Intentions, Bad Outcomes,” Policy Research Working Paper 9212, 2020. IMF, “Tackling the Global Food Crisis: Impact, Policy Response, and the Role of the IMF,” IMF Notes, 2022. Busso, M., and Galiani, S., “The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment,” American Economic Journal: Applied Economics, 2015. European Commission, EU Agri-Food Chain Observatory, launched July 2024. Commission Implementing Regulation (EU) 2019/1746 on market transparency in the agri-food supply chain. FAO, Food Price Monitoring and Analysis (FPMA) and Global Information and Early Warning System (GIEWS). Stiglitz, J., “Information and the Change in the Paradigm in Economics,” Nobel Lecture, 2001. North, D., Institutions, Institutional Change and Economic Performance, Cambridge University Press, 1990. Surin, R., “L’autarcie inflationniste: pourquoi 92% de l’inflation alimentaire haïtienne échappe désormais aux dynamiques internationales,” Le Nouvelliste, April 2026.