Institutions vs. Policies: A Tale of Two Islands

18 Pages Posted: 29 Dec 2008 Last revised: 14 Mar 2010

See all articles by Peter Blair Henry

Peter Blair Henry

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER); Brookings Institution; Leonard N. Stern School of Business - Department of Economics

Conrad Miller

Stanford University

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Date Written: December 2008

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

Henry, Peter Blair and Miller, Conrad, Institutions vs. Policies: A Tale of Two Islands (December 2008). NBER Working Paper No. w14604. Available at SSRN: https://ssrn.com/abstract=1320850

Peter Blair Henry (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

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National Bureau of Economic Research (NBER)

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Brookings Institution ( email )

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Leonard N. Stern School of Business - Department of Economics

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Conrad Miller

Stanford University ( email )

Stanford, CA 94305
United States

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