Potential Growth and Productivity in the Caribbean

Alexander Amundsen, Sophia Chen, Pierre Guérin, Sinem Kiliç Çelik and Masahiro Nishida

No 2025/157, IMF Working Papers from International Monetary Fund

Abstract: Medium-term growth prospects of Caribbean countries have weakened in recent years. We examine these trends by providing new estimates of potential GDP growth for the region. Our findings reveal a broad-based decline over time, driven by declining contributions from human capital and total factor productivity. Linking these factors to firm-level data, we identify significant scope for aggregate productivity gains through the efficient reallocation of resources between firms and the removal of firm-level structural obstacles. Addressing issues such as the cost and access to finance, workforce education, tax administration, and business licensing and permits are associated with higher aggregate welfare.

Keywords: Potential Growth; Allocative Efficiency; Firm-level Analysis; Caribbean; Medium-term growth prospect; IMF working paper 2025/157; productivity in the Caribbean; growth accounting exercise; potential GDP growth; Total factor productivity; Productivity; Human capital; Tax administration core functions (search for similar items in EconPapers)
Pages: 48
Date: 2025-08-08
New Economics Papers: this item is included in nep-eff and nep-sbm
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