Convergence and the Caribbean

This paper examines the convergence experience of selected Caribbean countries. It examines evidence of reduced dispersion in real per capita income—Sigma convergence—and 'catch up' growth across the group—Beta convergence. Estimation of the Solow—Swan cross-section model for the Caribbean shows weak evidence of β and σ convergence. However, structural instability and evidence of divergence over the sample period, suggest this convergence to be spurious. Further tests on individual country data showed an absense of steady state convergence for any country over time. Institutional structures and adjustments to economic shocks appear to have been important for the determination of per capita income in the long run.