Competitiveness in the Caribbean and Central America

This study investigates the role of price competitiveness and other factors such as global aggregate demand, investment and technology, on the growth of tradable output in the Caribbean and Central America. We use a measure of price competitiveness which reflects the structure of the tradables sector of each country, and the fact that these small economies are price takers on the global market. We find that global aggregate demand is the only significant driver of tradable growth, taking into account both the magnitude of the estimated effects and their statistical significance. The impact of price competitiveness is insignificant