Growth Diagnostic of Cape Verdean Economy

The main of this article is to analyse the evolution of Cape Verdean economy and find a binding constraint to economic growth, using the technique “growth diagnostic” proposed by Hausmann et al. (2005). The real GDP per capita in Cape Verde increased from US$ 806 in 1970 to US$ 2.830 in 2011, with average annual growth rate of 3.3%. The service sector was the main share in GDP production side. Cape Verdean economy presents great dependence of external capital and, despite the considerable growth, the unemployment rate remains high and public debt is high but sustainable. We found some factors that constitute constraints to economic growth, as weak financial intermediation, poor infrastructure, high costs in the inter-island connections and strong deviation between the human capital needs and areas of formation of secondary and tertiary education. Thus, government policies should be aimed at overcoming these barriers