Working Paper Series: Special Edition of 2016 to 2018 Interns

complemented by his results, which states that “slower population growth results in a higher equilibrium level of both output and capital stock per unit labour”.

Results in both models also showed that under a fixed exchange regime, final private consumption has a colossal negative impact on the dependent variable at the five percent level of significance, while it is positive and insignificant to log per capita GDP in floating exchange rate regimes. Also, the negative impact is more prevalent in the Caribbean countries. Worrell et al (2017) highlighted that in these small open economies, consumption affects per capita GDP negatively through the sustained deficits in the fiscal balances. The authors also alerted that the Caribbean imports majority of the goods and services they consume which overshoots net exports relative to consumption, thus mitigating domestic per capita GDP growth. Engines for Regional Growth : In all models displayed above, the coefficient associated with the initial level of log per capita GDP is positively significant (at the 1% level of significance), implying persistence and conditional divergence. Bonnefond (2014) using a different study demography stated that this positive relationship indicates that among the countries in the region, none have reached a steady state level of growth. He lamented that results could also mean that among the countries in the region, the ones who share similar structural peculiarities, and were initially richer are still recording improved growth rates synonymously to the those of the poorer nations. The other positively significant variables to per capita GDP in models assessed were foreign direct investments and inflation. In the models, the coefficient associated with the share of foreign direct investments is significantly positive throughout the regions especially under fixed exchange regimes at the 10% level of significance or better. According to models, a 1% increase in foreign investments are associated with a 2% increase in the growth rate of per capita GDP. This result is close to the 1.5% estimated by Ding and Knight (2011). Albeit its positive coefficient, inflation estimates are all negligible in the models specified. Author theorizes that these results imply that inflation is a consequence of economic activities and decisions, not a cause nor an impact factor whenever assessing per capita GDP growth.

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