Searching for Binding Constraints on Economic Growth in Aruba : Applying the Growth Diagnostics Approach

Aruba pulled off a remarkable economic recovery after the shutdown of the Lago oil refinery in 1986. Largely fuelled by the rapid expansion of the tourism industry, real gross domestic product growth rates averaged at 4.8 percent during the period 1986-1992. Yet in more recent years, growth rates have diminished and it has become evident that Aruba is unlikely to sustain its growth record relying solely on an expansionary tourism industry. By applying the Growth Diagnostic methodology this work analyses the binding constraint to growth in Aruba.