Boosting Economic Growth in Barbados Through Technological Innovation: Insights from IDB Economist

Barbados must adopt more technological innovations if it wants to reverse lagging productivity and unlock more economic growth.

That is the assessment of Cloe Ortiz de Mendivil, Inter-American Development Bank (IDB) country economist for Barbados.

“In Barbados, total factor productivity (TFP) is at the same level as two decades ago, and a boost to innovation is necessary to increase growth prospects,” she says in the IDB Caribbean Country Department’s final Caribbean Economics Quarterly for 2024.

The publication, titled Innovation For Faster Economic Growth In The Caribbean: Are We There Yet?, examines the connection between technological innovation and economic growth in Barbados, The Bahamas, Guyana, Jamaica Suriname, and Trinidad and Tobago. These are the six IDB member countries covered by the bank’s Caribbean Country Department.

Downward trend

The report noted that “TFP, which explains technological progress in an economy, has been a key factor explaining the lack of growth in the region”.

“The Bahamas has been no exception . . .Bahamian TFP peaked in the 1990s and since then has been slowly decreasing. There is a shared downward trend with Barbados and Jamaica, meaning that a significant part of the region has suffered a decrease in TFP over the last 20 years,” the publication stated.

In the section on Barbados, de Mendivil concluded that “public policies designed to improve the provision of public services as well as to address the main challenges to engage in innovation . . . such as the skills mismatch in the labour force and access to finance – will help strengthen the enabling environment for innovation”.

“This will in turn increase productivity, attract investment, and ultimately boost growth in Barbados,” she said.

The economist explained that “innovation is a key driver of productivity, which in turn determines economic growth”.

Sluggish

“TFP refers to the portion of output that cannot be explained by the amount of inputs – typically labour and capital – used in producing such output,” she noted.

“Therefore, if a country is able to obtain higher outcomes using the same quantity of inputs, it is considered that it has increased its productivity.”

She observed that “since the global financial crisis of 2008, growth in Barbados has been sluggish and for the most part below the Caribbean average”.