This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. The countries that were once British colonies in the Caribbean share a common language and a colonial history of slavery, dominance of a plantation-based sugar

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... stry, and broadly similar government and administrative traditions. Following independence in the late-1960s economic strategies and performance across the region diverged. However, by the end of the 1980s, in the face of economic collapse Guyana had abandoned its strategy of "cooperative socialism", and its economic policies converged with those generally supported by the IMF and World Bank. Despite this policy convergence and shared colonial origins, economic performance and social indicators in Guyana and Barbados have continued to diverge. The paper explores some of the origins of this divergence, and, in particular, the deep seated factors that derive from the countries' history, geography, and demographics. In Guyana, while the focus on sound macroeconomic policies and donor support has been important, the most pressing requirement for sustained progress is to strengthen domestic institutions and build consensus on the country's future direction. JEL Classification Numbers: D02, F54, N16, O43, O54