Biography

Sameeksha Desai

Denvil Duncan

Article Title

Decomposing Classes of Risk and Economic Performance in Caribbean Countries

Abstract

Disentangling the effects of risk on economic performance requires studying specific classes of risk and their components. We use a panel from 1984-2011 to examine the effect of political risk on economic performance, measured as changes in economic growth and economic development. We do this in two steps. First, we examine political risk, as twelve classes by the International Country Risk Guide, in six large Caribbean economies: Bahamas, Cuba, Dominican Republic, Haiti, Jamaica and Trinidad and Tobago. This allows us to identify the most significant classes of political risk affecting economic performance. In our second step, we decompose the significant classes of political risk into their sub-components, and test individual effects on economic performance. We find that some specific types of risk are associated with poor economic performance and outline key resulting policy implications.