Home' Trinidad and Tobago Guardian : June 19th 2014 Contents BG6 | NEWS
BUSINESS GUARDIAN www.guardian.co.tt JULY 2012 • WEEK FOUR
T&T has lost more than 70 per cent of its
tertiary level educated labour force through
emigration to developed countries, according
to an Inter-American Development Bank
(IDB) report released Tuesday.
The report looks at events up to 2012.
The T&T labour force, according to sta-
tistics from the Central Statistical Office is
made up of 635,100 persons as at the first
quarter of 2013.
The report entitled, Is there a Caribbean
Sclerosis? Stagnating Economic Growth in
the Caribbean, said 79 per cent of the labour
force in T&T who received tertiary level edu-
cation up to 2011 migrated to member coun-
tries of the Organisation for Economic Co-
operation and Development (OECD).
"The OECD has been called a think tank,
monitoring agency, rich man s club and
unacademic university. Whatever you want
to call it, the OECD has a lot of power. Over
the years, it has dealt with a range of issues,
including raising the standard of living in
member countries, contributing to the expan-
sion of world trade and promoting economic
stability," according to Investopedia. The
term OECD countries is often used loosely
in economics as a euphemism for developed
"Euro sclerosis" was a term coined in the
1970s to describe stagnant integration, high
unemployment, and slow job creation in
Europe relative to the United States, authors
of the report explained. Since then, the term
has been used more generally to refer to over-
all economic stagnation, they said.
The report was prepared by members of
the Caribbean Economics Team (CET) of the
Country Department of the IDB.
The term "sclerosis" and that which it
encompasses can be applied as well to a cer-
tain extent to the Caribbean countries, the
The almost-exclusive focus on economic
growth in the report does not imply that it
should be the sole criterion to judge economic
performance, the authors said. Nevertheless,
economic growth is the central concern of
Caribbean policymakers, who recognise that
it is critical to improve broad economic devel-
opment, and hence to improve the welfare
of Caribbean citizens.
The central focus in the report is on six
countries in the region, which were referred
to as the C6: The Bahamas, Barbados,
Guyana, Jamaica, Suriname, and T&T. How-
ever, the analysis also included, most often
in the aggregate, the countries of the Organ-
isation of Eastern Caribbean States (OECS).
The six members of the OECS used in the
report were Antigua and Barbuda, the Com-
monwealth of Dominica, Grenada, St Kitts
and Nevis, St Lucia, and St Vincent and the
"Economic growth can be due to increases
in productivity, which, in turn, are driven by
competitiveness. Without competition, there
are inadequate incentives for enterprises to
invest in innovation to increase their pro-
ductivity. Without innovation and produc-
tivity growth, economic growth stagnates.
Thus, a hypothesis of what underlies the
Caribbean growth gap is that the region has
a lower level of productivity and an inferior
level of competitiveness," the authors wrote.
One way to promote economic growth is
to increase the amount and types of labour
and capital used in production and to improve
the efficiency of how these factors of pro-
duction are used together, they said - that
is, to improve productivity.
Productivity growth comes from more
efficient use of inputs through improvements
in the management of production processes,
organisational changes, and innovation, the
Thus, there are three main direct growth
factors that could account for the Caribbean s
relative decline. The first is a decrease in the
number of people working relative to the
total population. The second is the lower use
of capital per unit of labour. The third is
inferior technological progress as measured
by changes in total factor productivity (TFP),
the report said.
"Growth decomposition quantifies the
contribution of each factor to economic
growth, and hence can be used to discern
the roles of inputs (labour and capital) and
TFP in explaining the growth differential
between the Caribbean and the rest of small
economies," (ROSE) the report said.
Labour input shows lower growth in the
labour force in the Caribbean among the
economically active population, which is
used because employment figures are gen-
erally not available for the region, the IDB
Lower population figures for the Caribbean
are partly due to high net emigration rates,
the report said.
"According to Mishra (2006), the Caribbean
countries have lost more than 70 per cent
of their labour force with more than 12 years
of schooling through emigration. This is wor-
risome because one of the few non-contro-
versial stylised facts in economic growth lit-
erature is the positive contribution of
education to economic growth," the report
Thus, migration affects the Caribbean
countries ability to generate economic growth
and jobs, the report said.
This migration, however, does have an
upside in terms of high remittances, it said.
"Remittance flows are the largest source of
external funding for the Caribbean; since the
1990s, remittances have been greater than
foreign direct investment and official devel-
opment flows (the latter has actually
declined). Thus remittances ease the external
constraint on growth," the report said.
However, according to Mishra (2006) the
monetary value of the sum of emigration
losses plus education expenditure costs is
larger than the monetary value of remittances,
the report said.
"Thus, migration represents a net negative
shock to the Caribbean, in addition to the
social cost of high unemployment and the
political implications of lots of well educated
unemployed people," it said.
Another input for economic growth is cap-
ital, the report said. Investment was histor-
ically lower in the Caribbean prior to 1992,
became relatively larger for a while, and then
fell back to the same level as the rest of small
economies (ROSE) by 2010, the report said.
However, the rise in Caribbean gross capital
formation was mainly due to an increase in
public investment that was accompanied by
an increase in the debt-to-gross domestic
product (GDP) ratio relative to the ratio for
ROSE. Private investment as a proportion of
GDP fell below that of ROSE after 2000.
Further, as gross capital increased relative
to ROSE, simultaneously TFP fell below that
of ROSE and has continued falling. The report
showed that since the late 1990s Caribbean
TFP has declined more and more below that
of ROSE. There is, however, a different pattern
between tourism- and commodity-based
countries. Tourism-based economies have a
continuous decline while commodity-based
have begun to close the gap.
Part of the answer of why there is a growth
gap is because of lower inputs in production
and a lower level of TFP in the Caribbean,
the report said.
Lower inputs and TFP, in turn, could be
due to a number of factors. The report said:
"A competitiveness gap is often considered
to be the reason behind an economic growth
Citing the results of the Global Compet-
itiveness Index, the report said: "The wide
and widening competitiveness gap of the
Caribbean countries could be a candidate to
account for the region s productivity growth
IDB: T&T lost more than 70 per cent
of tertiary educated from brain drain
Links Archive June 18th 2014 June 20th 2014 Navigation Previous Page Next Page