Sources of growth in a small open economy: Accounting for the effect of human capital on real output in Barbados

Author(s): Boamah, Daniel O. (1996)

Created 22 Jul, 1996
Categories Working Papers
Views: 1996
This paper concludes that human capital accumulation has been significant in explaining changes in real output in Barbados over the period 1964-1993. Its contribution to the growth process varied between 20% to 48% while physical capital contribution was between 31% to 57%. The analysis also suggests that technical change over the period has largely been embodied in labour. This is consistent in an economy like Barbados which is famous for the high investment in education and which boasts a literacy rate of over 90%. While the results appear plausible, they need to be taken with caution to the extent that the study is based on the neo-classical marginal productivity theory of labour which assumes that labour is paid the value of its marginal product.

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