Potential Growth and Productivity in the Caribbean

IMF Working Papers, August 8, 2025

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Potential Growth and Productivity in the Caribbean

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Bibliographic details

• Authors: Alexander Amundsen, Sophia Chen, Pierre Guérin, Sinem Kiliç Çelik, Masahiro Nishida
• Published: August 8, 2025
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9798229016650.001

Summary findings

• Medium-term growth prospects of Caribbean countries have weakened in recent years.
• New estimates of potential GDP growth for the region show a broad-based decline over time.
• Declines are driven by falling contributions from human capital and total factor productivity.
• There is significant scope for aggregate productivity gains through:
  • Efficient reallocation of resources between firms.
  • Removal of firm-level structural obstacles.
• Addressing constraints such as the cost and access to finance, workforce education, tax administration, and business licensing and permits is associated with higher aggregate welfare.

Drivers of the decline in potential growth

• Human capital:
  • Declining contribution to potential GDP growth identified as a central factor.
• Total factor productivity:
  • Declining contribution to potential GDP growth identified as a central factor.
• Aggregate pattern:
  • The decline is broad-based across the Caribbean region.

Firm-level analysis and policy implications

• Firm-level data linkage:
  • Analysis connects declining human capital and total factor productivity to firm-level dynamics.
• Potential policy levers to raise aggregate productivity and welfare:
  • Improve cost and access to finance for firms.
  • Enhance workforce education.
  • Strengthen tax administration and tax administration core functions.
  • Streamline business licensing and permits to remove firm-level structural obstacles.
• Expected outcomes:
  • Efficient resource reallocation between firms and removal of obstacles are associated with higher aggregate welfare.

Key publication and metadata

• Title: Potential Growth and Productivity in the Caribbean
• Authors: Alexander Amundsen, Sophia Chen, Pierre Guérin, Sinem Kiliç Çelik, Masahiro Nishida
• Date: August 8, 2025
• Series: IMF Working Papers
• Working Paper No.: 2025/157
• Issue: 157
• Volume: 2025
• Pages: 48
• DOI: https://doi.org/10.5089/9798229016650.001
• Stock No: WPIEA2025157
• ISBN: 9798229016650
• ISSN: 1018-5941
• Subjects: Human capital, Labor, Production, Productivity, Revenue administration, Tax administration core functions, Total factor productivity
• Keywords: Allocative Efficiency, Caribbean, Firm-level Analysis, growth accounting exercise, Human capital, IMF working paper 2025/157, Medium-term growth prospect, potential GDP growth, Potential Growth, Productivity, productivity in the Caribbean, Tax administration core functions, Total factor productivity

IMF Working Paper No. 2025/157

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