Abstract
Accelerating real economic growth requires harnessing technology to increase productivity. The slowdown in Caribbean growth over the last three decades reflects a decline in total factor productivity. Reversing this trend requires addressing the factors that reduce productivity. This chapter notes that while productivity has declined for most Caribbean countries, the drop has been larger in tourism-dependent economies than in commodity exporters. Information and Communication Technology has a positive impact on growth in the Caribbean but has a smaller impact than in other groups of countries. These findings are broadly consistent with enterprise-level data, which suggest that an innovation deficit among Caribbean firms is a large contributing factor.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
The Caribbean is defined as the independent countries in the Caribbean Community (CARICOM) except Haiti for which the data provides an even more significant challenge. The thirteen countries are Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago.
- 2.
The EM-DAT database records information on natural disasters since 1900 and contains information including the type of disaster, number of people affected, and in some cases, estimates of the damage.
- 3.
Hurricane Maria caused damage of over 200% of GDP in Dominica in 2017, while hurricane Ivan caused about the same level of damage to Grenada in 2005. Storms of greater severity and intensity are expected in the future.
- 4.
This estimate is derived from post assessment damage report for the 2017 hurricane in Dominica which provides a breakdown of the total damage. Estimates of 40 and 50% yield broadly the same trend.
- 5.
The CARICOM Single Market and Economy includes a protocol for the creation of a single economy in services, but there has been little progress toward this goal.
References
Acemoglu, D., & Autor, D. H. (2011). Skills, tasks and technologies: Implications for employment and earnings. In O. Ashenfelter & D. E. Card (Eds.), Handbook of labor economics (Vol. 4, pp. 1043–1171). Elsevier. https://doi.org/10.1016/S0169-7218(11)02410-5
Banerjee, R. (2012). Population growth and endogenous technological change: Australian economic growth in the long run. Economic Record, 88(281), 214–228. https://doi.org/10.1111/j.1475-4932.2011.00784.x
Barro, R. J., & Lee, J. W. (1994). Sources of economic growth. Carnegie-Rochester Conference Series on Public Policy, 40, 1–46. https://doi.org/10.1016/0167-2231(94)90002-7
Barro, R. J., & Lee, J. W. (2013). A new data set of educational attainment in the world, 1950–2010. Journal of Development Economics, 104, 184–198. https://doi.org/10.1016/j.jdeveco.2012.10.001
Baumol, W. J. (1967). Macroeconomics of unbalanced growth: The anatomy of urban crises. American Economic Review, 57(2), 415–426.
Bernanke, B. S., & Gürkaynak, R. S. (2002). Is growth exogenous? Taking Mankiw, Romer, and Weil seriously. In B. S. Bernanke & K. Rogoff (Eds.), NBER Macroeconomics annual 2001 (Vol. 16, pp. 1–72). MIT Press. https://www.nber.org/books-and-chapters/nber-macroeconomics-annual-2001-volume-16/growth-exogenous-taking-mankiw-romer-and-weil-seriously
Boucekkine, R., Del RÃo, F., & Licandro, O. (2003). Embodied technological change, learning-by-doing and the productivity slowdown. Scandinavian Journal of Economics, 105, 87–97. https://doi.org/10.1111/1467-9442.00006
Clarke, G., & Wallsten, S. J. (2006). Has the internet increased trade? Developed and developing country evidence. Economic Inquiry, 44(3), 465–484. https://doi.org/10.1093/ei/cbj026
Commander, S., Harrison, R., & Menezes-Filho, N. (2011). ICT and productivity in developing countries: New firm-level evidence from Brazil and India. Review of Economics and Statistics, 93(2), 528–541. https://doi.org/10.1162/REST_a_00080
Czernich, N., Falck, O., Kretschmer, T., & Woessmann, L. (2009). Broadband infrastructure and economic growth (CESifo Working Paper Series No. 2861). SSRN. http://papers.ssrn.com/abstract=1516232
Denison, E. (1962). Sources of growth in the United States and the alternative before us. New York, committee for economic development. Journal of Economic History, 23(3), 935–938. https://doi.org/10.2307/2228363
Denison, E., Griliches, Z., & Jorgenson, D. (1972). The measurement of productivity: An exchange of views between Dale W. Jorgenson and Zvi Griliches, and Edward F. Denison. Survey of Current Business, 52(5), 3–111.
Dohnert, S., Crespi, G., & Maffioli, A. (Eds.). (2017). Exploring firm-level innovation and productivity in developing countries: The perspective of Caribbean small states (IDB Monograph 503). Inter-American Development Bank. https://doi.org/10.18235/0000616
Feenstra, R. G., Inklaar, R., & Timmer, M. P. (2015). The next generation of Penn world tables. The American Economic Review, 105(10), 3150–3182. https://doi.org/10.1257/aer.20130954
Gollin, D. (2002). Getting income shares right. Journal of Political Economy, 110(2), 458–474. https://doi.org/10.1086/338747
Hahn, F. H., & Matthews, R. C. (1964). The theory of economic growth: A survey. Economic Journal, 74(296), 779–902. https://doi.org/10.2307/2228848
Hardy, A. (1980). The role of the telephone in economic development. Telecommunications Policy, 4(4), 278–286. https://doi.org/10.1016/0308-5961(80)90044-0
Hjort, J., & Poulsen, J. (2019). The arrival of fast internet in Africa. American Economic Review, 109(3), 1032–1079. https://doi.org/10.1257/aer.20161385
Hsieh, C., & Klenow, P. J. (2007). Relative prices and relative prosperity. American Economic Review, 97(3), 562–585. https://doi.org/10.1257/aer.97.3.562
Jorgenson, D. W., & Griliches, Z. (1967). The explanation of productivity change. Review of Economic Studies, 34, 249–280. https://doi.org/10.2307/2296675
Jorgenson, D. W., Ho, M. S., & Stiroh, K. J. (2008). Retrospective look at the U.S. productivity growth resurgence. Journal of Economic Perspectives, 22(1), 3–24. https://doi.org/10.1257/jep.22.1.3
Karabarbounis, L., & Neiman, B. (2014). The global decline of the labor share. Quarterly Journal of Economics, 129(1), 61–103. https://doi.org/10.1093/qje/qjt032
Katz, L. F., & Margo, R. A. (2014). Technical change and the relative demand for skilled labor: The United States in historical perspective. In L. P. Boustan, C. Frydman, & R. A. Margo (Eds.), Human capital in history: The American record (pp. 15–57). University of Chicago Press. https://doi.org/10.3386/w18752
Koutroumpis, P. (2009). The economic impact of broadband on growth: A simultaneous approach. Telecommunications Policy, 33(9), 471–485. https://doi.org/10.1016/j.telpol.2009.07.004
Lee, J. W. (2005). Human capital and productivity for Korea’s sustained economic growth. Journal of Asian Economics, 16, 663–687. https://doi.org/10.1016/j.asieco.2005.06.009
Leigh, D., Srinivasan K., & Werner, A. (2018). Unleashing Strong, Sustainable and Inclusive Growth in the Caribbean. In Alleyne, T., Otker, I., Ramakrishnan, U., & Srinivasan, K. (Eds.), Unleashing growth and strengthening resilience in the Caribbean (pp 1–17). International Monetary Fund.
Loayza, N., Fajnzylber, P., & Calderon, C. (2004). Economic growth in Latin America and the Caribbean: Stylized facts, explanations, and forecasts. World Bank. https://doi.org/10.1596/0-8213-6091-4
Mohan, P., Strobl, E., & Watson, P. (2016). Innovative activity in the Caribbean: Drivers, benefits and obstacles. In E. Grazzi & C. Pietrobelli (Eds.), Firm innovation and productivity in Latin America and the Caribbean: The engine of economic development (pp. 103–135). Palgrave Macmillan. https://doi.org/10.1057/978-1-349-58151-1_3
Qiang, C. Z., Rossotto, C., & Kimura, K. (2009). Economic impacts of broadband. In The World Bank (Ed.), 2009 Information and communications for development: Extending reach and increasing impact (pp. 35–50). The World Bank. https://documents1.worldbank.org/curated/en/645821468337815208/pdf/487910PUB0EPI1101Official0Use0Only1.pdf
Ruprah, I., Melgarejo, K. A., & Sierra. R. (2014). Is there a Caribbean sclerosis? Stagnating economic growth in the Caribbean. Inter-American Development Bank. https://publications.iadb.org/publications/english/document/Is-There-a-Caribbean-Sclerosis-Stagnating-Economic-Growth-in-the-Caribbean.pdf
Solow, R. M. (1957). Technical change and the aggregate production function. Review of Economics and Statistics, 39, 312–320.
Solow, R. M. (1960). Investment and technical progress. In K. J. Suppes & P. Stanford (Eds.), Mathematical methods in the social sciences (pp. 89–104). Stanford University Press. https://doi.org/10.2307/1926047
Syverson, C. (2011). What determines productivity. Journal of Economic Literature, 49(2), 326–365. https://doi.org/10.1257/jel.49.2.326
Thacker, N., Acevedo, S., & Perrelli, R. (2012). Caribbean growth in an international perspective: The role of tourism and size (IMF Working Paper WP/12/235). International Monetary Fund. https://www.imf.org/en/Publications/WP/Issues/2016/12/31/Caribbean-Growth-in-an-International-Perspective-The-Role-of-Tourism-and-Size-40025
Triplett, J. E., & Bosworth, B. P. (2000). Productivity in the services sector. Brookings Institution. https://www.brookings.edu/wp-content/uploads/2016/06/20000112.pdf
Vasilyev, D. (2019). Reinvigorating growth in Belize (IMF Working Paper WP/19/24). International Monetary Fund. https://www.imf.org/-/media/Files/Publications/WP/2019/wp1924.ashx
Witt, C. A., & Witt, S. F. (1989). Why productivity in the hotel sector is low. International Journal of Contemporary Hospitality Management, 1(2), 28–34. https://doi.org/10.1108/EUM0000000001669
World Bank (1990). Long-term economic prospects of the OECS countries. http://documents1.worldbank.org/curated/en/863941468225573002/pdf/multi0page.pdf
World Bank. (2016). Exploring the relationship between broadband and economic growth. World Bank Development Report. https://documents1.worldbank.org/curated/en/178701467988875888/pdf/102955-WP-Box394845B-PUBLIC-WDR16-BP-Exploring-the-Relationship-between-Broadband-and-Economic-Growth-Minges.pdf
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2022 The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
Samuel, W. (2022). Technology, Growth and Productivity in the Caribbean. In: Cannonier, C., Galloway Burke, M. (eds) Contemporary Issues Within Caribbean Economies. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-98865-4_3
Download citation
DOI: https://doi.org/10.1007/978-3-030-98865-4_3
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-98864-7
Online ISBN: 978-3-030-98865-4
eBook Packages: Economics and FinanceEconomics and Finance (R0)