Working Paper Series: Special Edition of 2016 to 2018 Interns

the growth path of St Vincent and the Grenadines. Further interventions that augment capital through improving technology are likely to have a positive impact on growth.

4.1.1 Growth By Education Level Table 3 also details results for average years of schooling by primary, secondary and tertiary education entered separately. Based on results of similar studies including Psacharopoulos and Arriagada (1986a, 1986b), Loening (2005) and Barro and Lee (1993, 2004), it was expected that the coefficient for primary level education would be positive and significant. However, in the case of St Vincent and the Grenadines this turned out to be highly significant but negative. It was also anticipated that primary education would be the most influential in terms of its contribution to growth. While this level did have the greatest magnitude coefficient, the negative relationship actually meant that an increase in the share of the population with just primary education would actually stymie growth. This is due to the decline in population of persons 15 and 20 years old as well the expectation that as education access increases and time passes, the labour force would become less constituted by workers with primary education as their highest education attainment level and more by those with post-primary education. In light of this finding, secondary education was the most important level of education for growth, followed by tertiary education. These results confirm Petrakis and Stamatakis (2002) and Papageoriou (2003) assertion that post- primary education increases with the level of development. St Vincent and the Grenadines’s output suggests that having achieved high attainment of primary school education, the country is at the stage of development where more skills transferred to the labour force at the secondary specialised and tertiary school levels are required to move the economy forward. The technology parameter and physical capital coefficients also respond differently to different levels of education. Long-run elasticity of physical capital can only be reliably calculated for secondary education since both primary and tertiary education offer statistically insignificant results. Short-run change of capital/worker is positive and significant across all three levels of education, but the tertiary education coefficient recorded the greatest magnitude. Following Loening (2005), this could be interpreted as secondary education having the strongest influence on the productivity of physical capital in the long run, while tertiary schooling would do so in the short-run.

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