Working Paper Series: Special Edition of 2016 to 2018 Interns

where is the economy-wide real interest rate, proxied by the total loan rate minus the inflation rate, both of which are taken from World Bank Country Data for St Vincent and the Grenadines. The price index P is for capital item as discussed above. Over the period, the quality of capital index reflected only minor variations. The estimate decreased by less than one full percentage point over 1972-1977 and climbed to a maximum in 2014. On the other hand, the quality of labour indices trend upward for the entire period. This is indicative of improvements to education attainment and the increased prevalence of jobs that require skilled workers (see Figure 2).

Figure 2: Quality Indices – Labour and Capital

SVG: Indices of Capital and Labour Quality, 1970-2014

170

160

150

140

130

120

110

100

1970

EmployedLabour Quality Index (hq) 1972 1974 1976 1978 1980 1982

1984

Capital Quality Index (Z) 1986 1988 1990 1992

1994

Labour Force Quality Index (hqL) 1996 1998 2000 2002 2004

2006

Source: Author’s Calculations

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