The purpose of this paper is to highlight the dual effect of demographic changes and emigration of young people on the economic growth of small Caribbean economies and the serious economic challenges arising therefrom.
The paper develops a theoretical model leading to a hypothesis that is later tested on Barbados.
Rising incomes have had very significant demographic changes in Barbados and other small Caribbean economies while proximity to large developed economies have contributed to emigration. Together, these have caused capital outflows from the economies as well as simultaneous shortage of skilled workers and high rates of overall unemployment.
Economic vulnerability of small states needs further detailed study.
One implication for the small Caribbean economies is to restructure their labour market through sustained skill development programmes so as to reduce the skill gap between the demand and supply of specific skills.
Although demographic shifts and their effects are widely studied, this paper highlights the special vulnerability of the small Caribbean economies to lower fertility, ageing and emigration.
