The Determinants of Economic Growth in The Countries of the Organization of the Eastern Caribbean States

Although the countries of the Organization of the Eastern Caribbean States (OECS) have registered some appreciable degrees of success concerning poverty reduction, education or schooling achievement, and economic growth, in many instances, much needs to be done in terms of poverty reduction, high external debt and overall development. The present paper reexamines the issue of the determinants of economic growth in the countries of the OECS in the period 1980-2011. Specifically, the paper answers two questions. What are the determinants of economic growth in the countries of the OECS? What are their short-run and long-run impacts? To this end, the paper uses the cointegration autoregressive distributed lag (ARDL) approach at the country level to draw conclusions concerning each country individually and the region as a whole. Overall, it is found that external debt, natural increase rate, and private consumption are the main drags to economic growth in the region in the short and long runs, and trade openness positively impacts economic growth. For any significant determinant, the long-run impact is in general far bigger than the short-run impact. Of note, natural disasters have negative impacts on economic growth, but only in a handful of countries. The negative impact of budget deficit shows up in one country with a complete data set. These results have policy implications.