IMF Working Papers

Caribbean Growth in an International Perspective: The Role of Tourism and Size

Author/Editor:

Nita Thacker ; Sebastian Acevedo Mejia ; Roberto Perrelli

Publication Date:

September 27, 2012

Electronic Access:

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Summary:

After earlier success, growth performance in most Caribbean countries has been disappointing since the early 1990s. With slower growth, output has fallen behind that of relevant comparator countries. This paper analyzes the growth experience of the Caribbean countries from a cross country perspective. Three findings stand out. First, the slowdown in growth is explained more by a decline in productivity rather than a lack of investment. Second, tourism has been a significant contributor to higher growth (through both capital accumulation and productivity) and lower output volatility, and in many countries there is scope for further expansion of this sector. Third, the small size and the fact that most of these countries are islands have limited growth. Policies aimed at improving productivity, further development of the tourism sector, and regional integration could pay dividends in terms of higher growth in the region.

Series:

Working Paper No. 2012/235

Subject:

Economic sectors Expenditure Labor Production Production growth Productivity Public expenditure review Total factor productivity Tourism