Working Paper Series: Special Edition of 2016 to 2018 Interns

but did not examine the marginal effect of an additional year of average schooling. 1.1 – Solow Framework GDP growth rates are decomposed by capital, labour and TFP over 5-year periods (Table 5). Results are consistent with the regression analysis. While the economy recorded efficiency gains recorded in TFP (18 per cent), the quality-adjusted labour played the most dominant role in the growth process (56 per cent). Given that the capital quality index demonstrated only marginal change over the entire study period, a relatively low contribution is expected. Table 5: Decomposition of GDP Growth Adjusted for Quality of Inputs (in per cent) Time GDP Growth Contribution of Period Rates Capital Labour TFP 1971-75 0.3 0.1 2.4 -2.2 1976-80 7.8 0.5 2.2 5.2 1981-85 4.8 0.6 2.7 1.5 1986-90 5.1 1.0 2.5 1.6 1991-95 3.7 1.0 1.5 1.1 1996-00 2.6 1.3 0.9 0.4 2001-05 4.5 1.2 1.7 1.5 2006-10 1.5 1.5 1.9 -2.0 2011-14 0.8 0.8 1.7 -1.7 Average 3.51 0.9 2.0 0.7 Overall Contribution (100%) 26% 56% 18% Source: Author’s Calculations. Discrepancies are due to rounding. Table 6 shows the framework decomposed by education level. It is expected that TFP contribution will increase because of the constant returns to scale constraint. Accordingly, it is the single largest contributor to growth (approximately 32.0 per cent). Labour and human capital combined account for 42.3 per cent of GDP growth, whereas capital accumulation remained unchanged. An examination of the respective levels of education helps to explain the development of the education system in St Vincent and the Grenadines and its impact on the labour force. During the period 1970- 1990, primary education contributed positively to GDP growth. Beyond this point, the addition of more workers with only primary education to the labour force made no overall contribution to growth. Results also depict the increasing role of tertiary education. Over the period 2001-05, tertiary education contributed more to growth than secondary education. This represented a major

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