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Institutions vs. Policies: A Tale of Two Islands

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  • Peter Blair Henry
  • Conrad Miller

Abstract

Recent 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.

Suggested Citation

  • Peter Blair Henry & Conrad Miller, 2008. "Institutions vs. Policies: A Tale of Two Islands," NBER Working Papers 14604, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:14604
    Note: EFG IFM ITI LE LS ME PE POL
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    File URL: http://www.nber.org/papers/w14604.pdf
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    References listed on IDEAS

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    1. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
    2. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
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    1. What can we learn from Barbados?
      by Economic Logician in Economic Logic on 2009-02-03 19:53:00

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    Cited by:

    1. Thomas Gall & Paolo Masella, 2012. "Markets and jungles," Journal of Economic Growth, Springer, vol. 17(2), pages 103-141, June.
    2. Azis Iwan J, 2011. "Endogenous Institution in Decentralization," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 16(2), pages 1-18, May.

    More about this item

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • F0 - International Economics - - General
    • N0 - Economic History - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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