Bim's efficiency failing
The impact of Barbados’ worrisome productivity may be worse than previously thought.
More than that, though, is a new International Monetary Fund document suggesting that the problem appears to be a very significant contributor to the island’s declining economic performance.
An IMF September 2012 working paper on the topic Caribbean Growth in an International Perspective: The Role of Tourism and Size used Barbados as “the benchmark country” for worker output and found it lost significant ground to neighbouring islands in the last three decades.
Authors Nita Thacker, Sebastian Acevedo, and Roberto Perrelli noted that while The Bahamas had the highest output per capita in the region, they chose Barbados because it had “a more diversified economy and is less dependent on the US as a source of tourism exports, making it a better benchmark country for the rest of the Caribbean”.
The report found that countries in the Eastern Caribbean were doing better than Barbados, productivity wise.
“Since the 1970s, in general, many of the countries have seen an improvement in both the output per worker and productivity and have been catching up with Barbados. For instance, with the exception of St. Lucia, all other ECCU countries show an improvement in productivity from 1970 to 2007,” the document noted.
“Among the other Caribbean countries, Belize and Trinidad and Tobago show considerable improvements in productivity vis-a-vis Barbados. Second, there are still sizable gaps between Barbados and some Caribbean countries.
“Dominica, Guyana and St. Vincent and the Grenadines have productivity levels at or below 50 per cent of the level in Barbados. This in turn is translated into low output per capita levels with respect to Barbados and the rest of the region,” it added.
The authors also noted that Antigua and Barbuda “could outperform Barbados in output per capita if it was not for Antigua’s low level of capital per worker, which was calculated to be 52 per cent of Barbados’.
The suggestion was that the twin island state “could catch up with Barbados’ output level by focusing on increasing its capital-per-worker ratio to Barbados’ level”.
Researchers also found the declining trend in Caribbean productivity when compared to the United States “troubling”.
“Instead of converging over time towards productivity levels in line with those of advanced economies, the Caribbean has been quickly drifting away,” the paper found.
“And given the critical importance of productivity in achieving higher output growth, it is imperative to reverse the trend if the Caribbean region is eventually going to catch-up with advanced economies’ output levels.” (SC)