Maggie's Farm

The current issue of the Digest from the National Bureau of Economic Research carries findings from Stanford University economists looking at the different economic outcomes for similarly situated Jamaica and Barbados from different macroeconomic policies pursued between 1960 to 2002.

Both had the institutional foundation from being British colonies and similar sugar and tourism-based economies, yet from 1960 to 2002 Barbados’ GDP expanded about three times faster than Jamaica’s.  The current income gap in favor of Barbados is near five times larger than at independence.

Why?

Jamaica pursued extensive state intervention in the economy, nationalization, income transfers and the like, and borrowed heavily to fund growing deficits.  Barbados followed a more restrained posture toward business, spending and borrowing.

Sound portentous?