Productivity growth in the Caribbean and Latin America under trade liberalization

Using the Malmquist productivity index as a measure of productivity, productivity was found to be greater in the Caribbean compared with Latin America, with the variation in the index being greater in the Caribbean.  Technological change accounted for a greater proportion of productivity growth in Latin America, and technical efficiency played a greater role in the Caribbean.  Compared to the pre- and post- covid years [Covid year = 2019], productivity growth decreased in Latin America, whereas productivity growth increased in the Caribbean, over that period.

In terms of the relative impact of variables impacting productivity growth, using obtained from using regression analysis indicates that policies to improve the literacy rate, making credit available to the private sector and increasing access to electricity will give this region an advantage, as the correlation between productivity growth and these variables were more favorable in this region. Also, expanding the manufacturing sector in the Caribbean is likely to have a greater positive impact in the Caribbean than in Latin America.   Latin America has the advantage of a greater positive impact on productivity in market size and decreasing the exchange rate.