61 / 133
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
Ratio
ROSE
Caribbean-C
Caribbean-T
C6
Underlying the relative decline is the
relatively worse performance of total
factor productivity.
(Ruprah and Sierra 2014)
Why?...Lower Total Factor Productivity Growth (TFPG)
The Productivity Challenge
Economic growth = change in human capital + change in physical capital + TFPG
Empirical evidence: About half of the
variation in income levels and growth
rates among countries is due to
differences in total factor productivity
(Hall and Jones, 1999).
Research findings: Investment in
Research and Development (R&D)
explains up to 75% of the differences in
total factor productivity growth rates
(Griliches, 1979).