Institutions versus Policies: A Tale of Two Islands
AbstractRecent work emphasizes the primacy of differences in countries' colonially-bequeathed property rights and legal systems for explaining differences in their subsequent economic development. Barbados and Jamaica provide a striking counter example to this long-run view of income determination. Both countries inherited property rights and legal institutions from their English colonial masters yet experienced starkly different growth trajectories in the aftermath of independence. From 1960 to 2002, Barbados' GDP per capita grew roughly three times as fast as Jamaica's. Consequently, the income gap between Barbados and Jamaica is now almost five times larger than at the time of independence. Since their property rights and legal systems are virtually identical, recent theories of development cannot explain the divergence between Barbados and Jamaica. Differences in macroeconomic policy choices, not differences in institutions, account for the heterogeneous growth experiences of these two Caribbean nations.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 99 (2009)
Issue (Month): 2 (May)
Other versions of this item:
- Henry, Peter B. & Miller, Conrad, 2008. "Institutions versus Policies: A Tale of Two Islands," Research Papers 2012, Stanford University, Graduate School of Business.
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- P14 - Economic Systems - - Capitalist Systems - - - Property Rights
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