Policy Benchmarking for Productivity and Growth: Review and Proposed Framework for the Caribbean
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This paper contributes to the analysis of the Caribbean's growth performance by setting out a framework for benchmarking indicators of key micro drivers and related structural policies that help explain differentials in productivity and real GDP per capita across the region, and relative to non-regional benchmark countries. The framework is adapted from the OECD's Going for Growth exercises. Its emphasis on micro-drivers in the labor market and the business environment aims to help shift the focus of the current discussions on growth from macroeconomic considerations (e.g. fiscal sustainability, exports) toward an exploration of productivity, which the literature identifies as the principal constraint to growth in the Caribbean and elsewhere. Potential advantages of a benchmarking-for-growth framework include knowledge sharing of the policies and performance indicators related to productivity in the Caribbean and appropriate benchmark countries. This could help stimulate further research and public discussion on the underlying factors behind the divergence in incomes as well as on the policies and environments that contribute to those differentials. An initial exercise highlights issues with restrictions for starting a business, the tax burden, the cost of imports and infrastructure deficiencies as potential barriers to growth.