Selected Bibliography on Small States1
References are grouped in the following index categories, with annotations where
available:
♦ Aid
♦ Data
♦ Economic Performance
♦ Environment
♦ Finance & Exchange Rates
♦ Globalization & External Shocks
♦ Growth & Development
♦ Industrialization & Technology
♦ Information Technology & E-commerce
♦ Institutions & Capacity
♦ Politics & Administration
♦ Regional Cooperation & Integration
♦ Risk & Insurance
♦ Size
♦ Trade & Transition
♦ Transport
♦ Vulnerability
Would you like to add references (with or without annotations)?
Please send them to smallstates@worldbank.org
1
This bibliography draws from a range of sources, including the “Selected Bibliography on
Small States’ Issues,” compiled for the Joint Task Force Report by the CARICOM
Secretariat in October 1999.
Aid
Collier, Paul and David Dollar. 1999. “Aid, Risk and Special Concerns of Small States.”
Paper presented at the Conference on Small States, St. Lucia, February 17-19,
1999.
de Vries, B.A. 1975. “Development Aid to Small Countries,” in Selwyn, P. (ed.),
Development Policy in Small States. London: Croom Helm Ltd.
Reid, G. 1986. “Development Assistance by Multilateral Financial Institutions to their
Smallest Members,” Paper presented at the Small States Financial Forum
Round Table on Small States and Multilateral Financial Institutions,
Washington D.C., 27th September, 1986.
Schiavo-Campo, S. 1975. “Some Considerations on Development Aid to Small
Countries,” in Selwyn, P. (ed.), Development Policy in Small States. London:
Croom Helm Ltd.
Venner, Dwight. 2000. “From Aid Coordination to Development Management in the
Eastern Caribbean”, Summary of a World Bank Executive Development
Program Project. Paper presented at the Global Conference on the
Development Agenda for Small States, London, 17-18 February 2000.
World Bank. 1998. Assessing Aid: What Works, What Doesn’t, and Why. A Policy
Research Report. New York: Oxford University Press.
World Bank. 1999. The Drive to Partnership: Aid Coordination and the World Bank.
Washington, D.C: World Bank, Operations Evaluation Department.
2
Data
Commonwealth Secretariat. 1998. Small States: Economic Review & Basic Statistics,
Fourth Volume, December 1998.
World Bank. 2000. World Development Indicators 2000. Washington, D.C.
3
Economic Performance
Armstrong, H., R.J. de Kervenoael, X. Li and R. Read. 1998. “A comparison of the
Economic Performance of Different Micro-states, and Between Micro-states
and Larger Countries.” World Development, 26(4), 639-656.
Fairbairn, T. I. J., and D. Worrell. 1996. South Pacific and Caribbean Island Economies:
A Comparative Study. Brisbane, Australia: The Foundation for Development
Cooperation.
Matsis, Symeon. 1999. “Economic Growth and Development Lessons from the
Experience of Cyprus: A Small Island Economy.” Paper presented at the
World Bank–Commonwealth Secretariat Conference on Small States, St.
Lucia, February 17-19, 1999.
Poon, A. 1989. “Flexible Specialization and Small Size: The Case of Caribbean
Tourism,” Paper presented at the Second Conference of Caribbean
Economists, Dover Convention Center, Bridgetown, Barbados, May 28-30,
1989.
Rajapatirana, Sarath. 1994. The East Asia Experience and its Relevance to the Caribbean
within the NAFTA Environment, May. Washington, DC: World Bank.
This paper examines the economic success of seven East Asian countries (Hong Kong,
Singapore, South Korea, Taiwan, China and Indonesia) and attempts to draw implications for
the nations of the Caribbean. The author begins by presenting the facts from the seven East
Asian countries that are relevant to the Caribbean context. He then examines the factors that
are commonly believed to have led to the success of these East Asian countries. The author
goes on to consider the Caribbean context, noting the similarities and the differences between
the East Asian and the Caribbean countries. The author compares the Caribbean countries to
the East Asian countries in terms of the factors that led to the success of the latter, and he
infers the policy and institutional relevance for the development of the Caribbean region.
Finally, he examines the external environment for the Caribbean group with special reference
to NAFTA.
Stone, Carl. 1983. Toward a Comparative Analysis of Small, Open Economies in the
Caribbean. Working Paper No. 133, Woodrow Wilson International Center
for Scholars, Latin American Program.
This paper develops a typology of Caribbean economies based on a qualitative and
quantitative appraisal of the differences and similarities among the various economies of the
region. The focus is both on structural features of the economies as well as on levels of
performance and advancement. The paper’s objective is to establish a basis for evaluating
economic policy progress comparatively by identifying the limits inherent in these structural
features and the critical variables or forces associated with economic advancement in the
postwar period. The author concludes that an emphasis on export orientation is unavoidable in
the region, but that this has to be combined with import substitution in basic goods production,
strategies for diversification of asset ownership, and forms of management to ensure that
benefits are spread to the majority classes.
Treebhoohun, Nikbhil. 1999. “The Mauritian Experience.” Paper presented at the World
Bank–Commonwealth Secretariat Conference on Small States, St. Lucia,
February 17-19, 1999.
4
Environment
Bartelmus, P., E. Lutz and S Schweinfest. 1993. “Integrated Environmental and
Economic Accounting: a Case Study of Papua New Guinea”, in E Lutz (ed),
Toward Improved Accounting for the Environment. World Bank, Washington
DC.
Bijlsma, L. 1996. “Coastal Zones and Small Islands”, in Intergovernmental Panel on
Climate Change, 1995, Impacts, Adaptation and Mitigation of Climate
Change – Scientific-Technical Analysis.
Cambridge University Press:
Cambridge.
IPCC (Intergovernmental Panel on Climate Change). 1992. Global Climate Change and
the Rising Challenge of the Sea (Report of the Coastal Zone Management
Sub-group), IPCC.
IPCC (Intergovernmental Panel on Climate Change). 1996. Climate Change 1995: IPCC
Second Assessment Report. Cambridge University Press: Cambridge.
Singh, N. 1991. “Environmental Problems and Opportunities in Small Open Economies,”
Paper presented at the Eastern Caribbean Central Bank and Commonwealth
Secretariat Symposium on Small States, ‘Problems and Opportunities in a
World of Rapid Change,’St. Kitts, 25-27 March, 1991.
Turner, R.K., S Subak and N. Adger. 1996. “Pressures, Trends and Impacts in Coastal
Zones: Interactions Between Socioeconomic and Natural Systems”,
Environmental Systems, Vol. 20(2): 159-173.
United Nations Commission for Sustainable Development. 1997. Implementation of the
Program of Action for the Sustainable Development of Small Island
Developing States: Report of the Secretary-General. Economic and Social
Council: New York.
5
Finance & Exchange Rates
Bennett, Karl M. 1981. An Investigation of Foreign Exchange Requirements for
Economic Growth in CARICOM Countries. Ontario: University of Waterloo.
Bennett, Karl M. 1992. “Exchange Rate Management in a Balance of Payments Crisis:
the Guyana and Jamaica Experience.” Social and Economic Studies.
(Jamaica), Vol. 41: 113-31.
Blackman, Courtney, N. 1981. “Management of Foreign Exchange Reserves in Small
Developing Countries.” Social and Economic Studies. (Jamaica), Vol. 30,
December: 156-71.
Bourne, Compton, Winston Cox, Felix Solis and DeLisle Worrell. 1985. Exchange Rate
Policy within the Caribbean Community. Inter-American Development Bank
and the Caribbean Community Secretariat.
Bourne, Compton and Ramesh L. Ramsaran. 1988. “Financial Deepening, Domestic
Resource Mobilization and Economic Growth: Jamaica, 1955-82.” In
Antonio Jorge, Jorge Salazar-Carillo, eds. Foreign Investment, Debt and
Economic Growth in Latin America. New York: MacMillan Press.
Caram, A. R. 1991. The Repercussions of Financial Imbalances in Surinam. Paper
presented at the International Conference on Islands and Small States held at
the University of Malta on May 23-25, 1991.
Codrington, Harold. 1989. “Country Size and Taxation in Developing Countries.”
Journal of Development Studies, Vol. 25, No. 4, July: 508-20.
Holder, Carlos and DeLisle Worrell. 1985. “Model of Price Formation for Small
Economies:
Three Caribbean Examples.” Journal of Development
Economics. (Netherlands), Vol. 18, August: 411-28.
Lim, G.C. and Jerome L. Stein. 1991. Real Exchange Rate and the Balance of Trade in a
Small Open Economy: The Case of Australia. Melbourne, Australia:
University of Melbourne, Department of Economics.
Menon, Jayant. 1995. Exchange Rates and Import Prices for a Small Open Economy.
Applied Economics. (U.K.), Vol. 27, March: 297-301.
Siddiqi, Q. 1987. “Finance for Small States.” Crown Agents Review, No. 1.
Sjaastad, Larry A. 1989. Exchange Rate Rules for Small Countries. University of
Western Australia, Department of Economics Discussion Paper No .89.05,
May.
Treadgold, M.L. 1991. Openness and the Scope for Macroeconomic Policy in Micro
States. Paper presented at the International Conference on Islands and Small
States held at the University of Malta on May 23-25, 1991.
Worrell, DeLisle and Compton Bourne, eds. 1989. Economic Adjustment Policies for
Small Nations: Theory and Experience in the English-Speaking Caribbean.
New York and London: Greenwood Press, Praeger.
6
This book is a compilation of twelve papers that were presented at the Caribbean Regional
Program of Monetary Studies conference held in St. Kitts in 1986. The collection begins with
studies that focus on the uses of monetary policy, ways of adjusting the balance of external
payments, and the design of fiscal policy. These papers are supplemented by a study that
proposes a new approach to the implementation of interest rate policy. The remaining articles
discuss the policies undertaken in each currency area within the English-speaking Caribbean;
this includes country studies on the Bahamas, Barbados, Belize, Guyana, Jamaica, the OECS
region and Trinidad and Tobago. The concluding paper presents an agenda for ongoing
research.
7
Globalization & External Shocks
Ahmed, Shaghil and Jae Ha Park. 1992. Sources of Macroeconomic Fluctuations in
Small Open Economies. Federal Reserve Bank of Philadelphia, Working
Paper No. 92-22, November: 1-41
Bernal, Richard L, 2000. “Strategic Global Repositioning of Caribbean Economies,”
Draft, presented at the high-level CDB-IMF seminar, Barbados, February
2000.
Bourne, C. 1991. “The Changing World Environment with Special Reference to Small
States,” Paper presented at the Eastern Caribbean Central Bank and
Commonwealth Secretariat Symposium on Small States, ‘Problems and
Opportunities in a World of Rapid Change’, St. Kitts, 25-27 March, 1991.
Cardia, Emanuela. 1991. “Dynamics of a Small Open Economy in Response to
Monetary, Fiscal, and Productivity Shocks.” Journal of Monetary Economics.
(Netherlands), Vol. 28, December: 411-34.
Dobozi, Istvan, ed. 1981. “Economic Choices of Small Countries in a Changing World
Economic Environment: Proceedings of the First Canadian-Hungarian
Economic Roundtable.” Trends in World Economy, No. 32. Hungarian
Scientific Council for World Economy.
Fehr, Ernst and Franz Hof. 1994. “Wage Bargaining and Shock Sensitivity of a Small
Open Economy.” Journal of Economics. (Austria), Vol. 59, No. 3: 259-86.
Harden, Sheila. 1985. Small Is Dangerous: Micro States in a Macro World. London:
Frances Pinter.
Karunasekera, Jackson. 1991. Global Change and Small States. Paper presented at the
International Conference on Islands and Small States held at the University of
Malta on May 23-25, 1991.
Krishna, Kala and Marie Thursby. 1994. Flexibility: a Partial Ordering. National
Bureau of Economic Research, Working Paper No. 4615: 1-24.
McCarthy, Desmond and Giovanni Zanalda. 1994. Caribbean Experience with External
Shocks. Washington, DC: World Bank.
McKee, David. 1994. External Linkages and Growth in Small Economies. Westport, CT
and London: Praeger.
This book compiles ten papers that examine the various ways in which small third-world
nations are becoming more closely linked to the global economy. The essays focus on:
externally traded services and the development of small economies; services and growth in
small developing countries; export earnings, instability and economic growth in Jamaica, 1957
to 1986; the ability of Caribbean firms to compete globally; an appraisal of the structure and
future prospects of the Haitian economy; small island economies, tourism, and political crises;
cruise ships in the third world -- developmental versus corporate financial objectives; the U.S.
dollar and small Caribbean economies; and Caribbean migration in a global economy.
Ramsaraan, Ramesh F. 1989. The Commonwealth Caribbean in the World Economy.
London: Macmillan Caribbean, Warwick University Caribbean Studies.
8
This book examines the recent development experience of Commonwealth Caribbean
countries and the relevance of international economic policies and institutions to their
development efforts. The author maintains that the small size of Caribbean nations places
certain limitations on the type of development they can pursue, while their middle income
status makes them ineligible for the concessional aid they need. The book includes a review
of recent trends in the world economy, recent structural changes in the Caribbean, and specific
problems facing various sectors of the Caribbean economy. The author discusses offshore
finance, the changing pattern of trade, trade policies, and the Caribbean integration
experience. In addition, he examines the balance-of-payments performance of Caribbean
states and the problem of foreign debt. He also addresses the reform of the international
monetary system and critiques the general framework of development used in the Caribbean.
Finally, the author discusses issues of development strategy in small states.
Ramsaraan, Ramesh F. 1993. “Complacency Endangers Competitiveness in the
Caribbean.” North-South: the Magazine of the Americas, Vol. 2, AprilMay:11-13.
Despite the region’s dependence on exports, Caribbean countries have not moved toward trade
liberalization and are resisting the trend toward a globalized economy. This article contends
that the Caribbean nations have become complacent because of preferential relations with the
developed world.
Attempts to integrate the region via the Caribbean Community
(CARICOM) have been largely ineffective. Trade liberalization without government policies
to assist the transition would be insufficient. The author maintains that a restructured
CARICOM and the elimination of special prerogatives are necessary for the future survival of
the Caribbean economies.
World Bank. 1994. Coping with Changes in the External Environment. World Bank
Report No. 12821 LAC, Caribbean Division, Country Department III, LAC
Region, May.
9
Growth & Development
Aghion, Philippe, and Peter Howitt. 1998. Endogenous Growth Theory. Cambridge,
Mass.: MIT Press.
Balassa, Bela. 1986. “Economic Development in Small Countries.” Acta Oeconomica,
Vol. 37, No. 3-4: 325-40.
Owing to the increasing role of economies of scale, the benefits of international trade are
especially important for small countries. The analysis of the four decades following World
War II shows that the economies of outward-oriented countries have performed uniformly
better than those of inward-oriented nations. The author recommends that inward-oriented
countries pursue several policy reforms: the adoption and maintenance of realistic exchange
rates; import liberalization; export promotion; positive interest rates; and improvements in
financial intermediation.
Barro, Robert. 1997. Determinants of Economic Growth: A Cross-country Empirical
Study. Cambridge, Mass.: MIT Press.
Barro, Robert, and Xavier Sala-i-Martin. 1995. Economic Growth. New York: McGrawHill.
Blazic-Metzner, Boris and Helen Hughes. 1982. “Growth Experience of Small
Countries.” In B. Jalan, ed. Problems and Policies in Small Economies. New
York, St. Martin’s Press: 85-102.
The authors argue against the hypothesis that small countries are handicapped in development
due to diseconomies of scale. They maintain that if small economies become specialized with
a relatively high participation in international trade, migration and capital flows, there is no
minimum scale for a country. The authors contend that decades of development experience
have shown that a nation’s economic performance depends primarily on its commitment to
growth and on the appropriateness of the policy framework used to implement its growth
strategy. The determination of national economic strategies and the policies to implement
them depends on social and political consensus, and a small population is more likely to reach
this consensus than is a large population. In addition, small economies are likely to be more
open, more competitive, and more flexible in their responses to a changing external
environment. They are also likely to have greater socio-cultural homogeneity and a more
equitable distribution of income which reduces the potential for social conflicts.
Chenery, H. B.,. and M. Syrquin. 1975. Patterns of Development, 1950-1970. London:
Oxford University Press.
Commonwealth Secretariat and World Bank. 2000. “Small States: Meeting Challenges
in the Global Economy”, Report of the Commonwealth Secretariat/World
Bank Joint Task Force on Small States. London, Commonwealth Secretariat.
Washington DC, World Bank.
Demas, W.G. 1965. The Economics of Development in Small Countries with Special
Reference to the Caribbean. Montreal: McGill University Press.
The author questions the relevance of the accepted economic development doctrine to small
countries, especially those of the Caribbean. He argues that the economic structure of small
states is different from that of larger nations and that new analytical tools and concepts are
necessary to consider their economic problems. The author discusses some of the difficulties
10
faced by small countries in achieving growth and in breaking out of the cycle of
underdevelopment, and he outlines alternative strategies of development open to these nations.
He then relates these general considerations to the specific situation in the Caribbean and
identifies special problems and opportunities facing economic policy makers in the Caribbean.
The analysis is supported with a priori reasoning rather than with an empirical examination of
data.
Dolman, A.J. 1982. “The Development Strategies of Small Island Countries: Issues and
Options.” In Small Island Countries, Regional Cooperation and the
Management of Marine Resources. The Hague: RIO Foundation.
Easterly, William, and Aart Kraay. 1999. “Small States, Small Problems?” Paper
presented at the Conference on Small States, St. Lucia, February 17-19, 1999.
Easterly, William, and Sergio R. Rebelo. 1993. “Fiscal Policy and Economic Growth: An
Empirical Investigation.” Journal of Monetary Economics 32(3): 417-58.
Findlay, Ronald and Stanislaw Wellisz, eds. 1993. Five Small Open Economies. A World
Bank Comparative Study. The Political Economy of Poverty, Equity, and
Growth. Washington, DC: World Bank.
Forster, Daniel W. 1987. “Development Problems and Prospects of Island Microstates.”
Economic Bulletin for Asia and the Pacific, Vol. 38, United Nations
Economic and Social Commission for Asia and the Pacific: 38-50.
Gillis, M., Perkins, D.H., M. Roemer, and D.R. Snodgrass. 1987. “Economics of
Development,” Second Edition. New York: W.W. Norton & Company.
Grossman, Gene, and Elhanan Helpman. 1991. Innovation and Growth in the Global
Economy. Cambridge, Mass.: MIT Press.
Kadar, B. 1981. “Adjustment Problems, Patterns and Policies in Small Countries.” Acta
Oeconomica, Vol. 27, Nos. 1/2: 125-38.
Karunasekera, J. 1991. “Small States: A Review of Literature and Major Development
Problems,” Paper presented at the Eastern Caribbean Central Bank and
Commonwealth Secretariat Symposium on Small States, ‘Problems and
Opportunities in a World of Rapid Change,’St. Kitts, 25-27 March, 1991.
Khalaf, Nadim G. 1979. “Country Size and Economic Growth and Development.” The
Journal of Development Studies, Vol. 16: 67-72.
This paper attempts to provide limited empirical evidence on the nature of the relationship
between country size and rates of economic growth and levels of economic development. It
also explores the effects of trade concentration and dependence on trade on this relationship.
The author suggests that there is no discernible association between country size and
economic development, nor between country size and economic growth, and that neither the
dependence on trade of small countries nor their commodity and geographic export
concentration are necessarily important factors in economic growth and economic
development.
Kuznets, Simon. 1960. “Economic Growth of Small Nations.” In E.A.G. Robinson, ed.,
The Economic Consequences of the Size of Nations: Proceedings of a
Conference Held by the International Economic Association. London:
Macmillan.
11
The author argues that the challenge of economic growth is much more difficult for small
nations than it is for large nations. The small nation is limited in terms of area, population and
variety of natural resources, and is confronted with greater problems of security. To overcome
the disadvantage of small size, the author suggests that the small country must compensate
with the quality of its people and of its social institutions; it must be able to adjust its
institutions to ever-changing technology rapidly and thoroughly. The author contends that
small countries benefit from social consensus and can reach decisions more quickly than can
large countries. This capacity for continuous and relatively painless adjustment can be used to
take better advantage of the potentials for economic growth.
Lestrade, Swinburne. 1987. “Economic Issues Affecting the Development of Small
Island States: the Case of the Caribbean.” Courier, No. 104, July-August.
Commission of the European Communities: 78-84.
The author contends that the smaller Caribbean countries are beset by certain constraints
which appear to relate directly to their very small size. He outlines various problems
including weak financial institutions, a narrow tax base, a large public sector, dependence on
foreign aid and insufficient manpower capabilities. The author also discusses the role of
regional cooperation in delivering external financial and technical support to the small
Caribbean countries. He goes further to argue that the future of Caribbean economic
integration will be determined by the extent to which the countries are able to successfully
integrate production activity for the regional and extra-regional market.
Mankiw, N. Gregory, David Romer, and David Weil. 1992. “A Contribution to the
Empirics of Economic Growth.” Quarterly Journal of Economics 101. May
1992.
McKee, D. and C. Tisdell. 1990. Developmental Issues in Small Island Economies. New
York: Praeger.
This book analyzes the main issues in development economics as they affect the small island
economies of the Caribbean and the South Pacific. Subjects include: the impact of the
primary export sector; manufacturing for export as a development option; the developmental
potential of the service sector; the role of the public sector with special reference to public
service employment; the potential difficulties related to tourism; the role of urbanization in the
development process; the developmental implications of migration from and between small
island nations; education and the “brain drain”; issues relating to crime; the role of agriculture
and natural resources in the development of small island nations; and environmental and
conservation issues. The aim of the book is to present a realistic appraisal that may be useful
for public policy and developmental planning.
Milner, Chris and Tony Westaway. 1993. “Country Size and the Medium-Term Growth
Process: Some Cross-Country Evidence.” World Development, Vol. 21, No. 2
February: 203-11.
This paper summarizes the findings of an empirical study of the influence of country size and
remoteness on the sources of growth and the nature of the growth process in industrializing
countries. Various hypotheses were investigated in the study in the context of a model of
disequilibrium growth which allows for technological spillover between sectors and between
countries. The model was estimated for a large sample of developing economies for 1973-85.
Evidence of significant structural breaks permitted inferences to be drawn about how the
nature and extent of technological spillovers are influenced by country size. The authors
conclude that while there is no obvious link between medium-term growth performance and
12
country size, there is some evidence that certain sources of growth over the medium term are
affected by country type.
Romer, Paul. 1986. “Increasing Returns and Long-Run Growth.” Journal of Political
Economy 94: 1002-37.
Rottenberg, Simon, ed. 1993. Costa Rica and Uruguay. A World Bank Comparative
Study. The Political Economy of Poverty, Equity, and Growth. Washington,
DC: World Bank.
Selwyn, Percy, ed. 1975. Development Policy in Small Countries. London: Croom Helm,
Ltd.
Smith, B.J. 1987. “Some Aspects of Economic Adjustment in Small Island Economies”,
in Holmes, F., “Economic Adjustment: Policies and Problems,” International
Monetary Fund, Washington.
United Nations Conference on Trade and Development. 1983. Specific Action Related to
the Particular Needs and Problems of Landlocked and Island Developing
Countries: Issues for Consideration. Report by the UNCTAD Secretariat,
UNCTAD Conference, sixth session, Policy Paper TD/279, Parts 1-2. (June).
United Nations Conference on Trade and Development. 1984. “Islands in the Sun - Have
Problems Too.” UNCTAD Bulletin, Vol. 198, December-January.
13
Industrialization & Technology
Chenery, Hollis Burnley, Sherman Robinson and Moises Syrquin. 1986. Industrialization
and Growth: a Comparative Study. New York: Oxford University Press for
the World Bank.
de Vries, Barend A. 1984. “Industrial Policy in Small Developing Countries: Issues in
Determining an Appropriate Strategy.” Finance & Development, June: 39-41.
Freeman, Christopher and Bengt Ake Lundvall, eds. Small Countries Facing the
Technological Revolution. London and New York: Pinter, Distributed by
Columbia University Press, New York.
Fung, Ka-yiu Michael and Jota Ishikawa. 1991. “Dynamic Increasing Returns,
Technology and Economic Growth in a Small Open Economy. Journal of
Development Economics. (Netherlands), Vol. 37, November: 63-87.
German Development Institute. 1988. “Economic and Industrial Development Options
for Small Third World Countries.” Occasional Papers of the German
Development Institute, No.91, Berlin.
Griffith, Winston H. 1990. “CARICOM Countries and Appropriate Technology.” World
Development, Vol. 18, No. 6, June: 845-58.
Hughes, Helen. 1984. “Industrializing Small Countries.” Industry and Development, Vol.
10, No. 12: 89-99.
Keesing, Donald B. 1968. “Population and Industrial Development: Some Evidence
from Trade Patterns.” American Economic Review, June: 448-55.
This study explores the extent to which industrial development in small countries is
handicapped by an inability to fully exploit internal and external economies of scale. The
author examines evidence of the relationship between population size and per capita exports
and imports in 31 countries. He also looks at the relationship between per capita exports and
imports and per capita income. The paper concludes that countries with small populations
experience a comparative disadvantage in many important manufacturing industries that is
uncompensated by a comparative advantage in others. (See Bela Balassa’s comment on this
paper in Balassa, Bela. 1969. “Country Size and Trade Patterns: Comment.” American
Economic Review. March: 201-204.)
Lewis, William Arthur. 1950. “The Industrialization of the British West Indies.”
Caribbean Economic Review, Vol. 2, No. 1: 1-51.
This paper examines three essential elements of industrialization: markets, resources and
economic policy. The author maintains that because the domestic market is too small to
support an increased production of manufactures, the West Indies must export and thereby
achieve necessary economies of scale. He discusses the principles of comparative advantage,
arguing that a country that is poor in natural resources can only get the food and raw materials
it needs by exporting its labor in the form of manufactures. He emphasizes that the low wage
level is one of the chief competitive features of the West Indies. The author goes on to rank
the suitability of various industries for the islands, based on a number of indices. He then
discusses the advantages of forming a customs union as well as the need to attract to the
islands foreign manufacturers who are already selling in Latin America, the U.S. and the U.K.
The author stresses the need for foreign capital inflow and advocates giving industries
14
incentives to relocate to the islands. He argues that industrialization of a new country cannot
be left to market forces alone but rather demands strategic government action.
Lundvall, B.A. 1983. Technology, Competitiveness and Small Countries. Smaskrift, No.
37. Denmark: Aalborg University Press.
OECD. 1983. “The Specific Problems of Small Countries.” CSTP Ad Hoc Group on
Science, Technology and Competitiveness, unpublished report. Paris: OECD.
Romer, Paul. 1990. “Endogenous Technological Change.” Journal of Political Economy
98(5): S71-102.
Walsh, Vivien. 1987. “Technology, Competitiveness and the Special Problems of Small
Countries.” STI Review (OECD): 81-133.
This paper considers some of the recent work on science, technology and economic growth
and its relevance to small advanced (OECD)economies. The author examines the small size
of domestic markets, the dependence on exports and imports, the level of financial risk in
relation to the size of firms, the role of regional markets, and the effect of all these factors on
innovation. She analyzes the shortage of resources for R&D and the organization of science
and technology with reference to the building of an indigenous capacity for innovation. The
author also discusses the effect of increasing internationalization and of structural change on
small countries’ innovative and economic performance. Finally, the author considers the
prospects for and some experiences of various strategies for small countries, including
investment by foreign multinational enterprises, encouragement of domestically owned
MNEs, finding niches in the market, specialization, and cooperation with other countries.
15
Information Technology & E-commerce
Schware, R & Kimberley, P. 2000. “Exploiting Information Technologies for Electronic
Commerce and Better Public Sector Management”. Paper presented at the
Global Conference on the Development Agenda for Small States, London, 1718 February 2000.
16
Institutions & Capacity
Burki, S. J., and G. E. Perry. 1998. “Beyond the Washington Consensus: Institutions
Matter.” The World Bank, Washington, DC.
Caldwell, J.C., G. E. Harrison and P. Quiggin. 1980. “The Demography of Micro-States.”
World Development 8 (12), 953-967.
Cole, Rodney V. 1991. Economic Development in the South Pacific: Promoting the
Private Sector. Paper presented at the International Conference on Islands and
Small States held at the University of Malta on May 23-25, 1991.
Commonwealth Secretariat. 1993. Foundation for the Future: Human Resource
Development, Report of the Commonwealth Working Group on Human
Resource Development Strategies. Commonwealth Secretariat: London.
Khatkhate, D.R., and B.K. Short. 1980. “Monetary and Central Banking Problems of
Mini States.” World Development, 8 (12), pp.1017-1025.
Sealey, Neil E. 1990. The Bahamas: An Introduction to the Human and Economic
Geography of The Bahamas. MacMillan Education Ltd.
United Nations Institute for Training and Research (UNITAR). 1971. Status and
Problems of Very Small States and Territories. New York.
17
Politics & Administration
Barrett, Ina. 1986. “Administrative Problems of Small Island States with Particular
Reference to the States of the Eastern Caribbean.” Social and Economic
Studies (Jamaica), Vol. 35, No. 1: 199-213.
Clarke, Colin and Tony Payne, eds. 1987. Politics, Security and Development in Small
States. London: Allen & Unwin.
Farrugia, Charles. 1993. “The Special Working Environment of Senior Administrators in
Small States.” World Development, Vol. 21, No. 2: 221-26.
Gayle, D.J. 1986. The Small Developing State: Comparing Political Economies in Costa
Rica, Singapore and Jamaica. Aldershot: Gower Press.
Henrikson, Alan K. 1999. “Small States in World Politics: The International Political
Position and Diplomatic Influence of the World’s Growing Number of
Smaller Countries.” Paper presented at the World Bank–Commonwealth
Secretariat Conference on Small States, St. Lucia, February 17-19, 1999.
Hope, Kempe R. 1983. “The Administration of Development in Emergent Nations: The
Problems in the Caribbean.” Public Administration and Development, Vol. 3:
49-59.
Jacobs, B.L. 1975. “Administrative Problems of Small Countries,” in Selwyn, P. (ed.),
Development Policy in Small States. London: Croom Helm Ltd.
Khan, J. 1982. Public Management: The Eastern Caribbean Experience. The Hague:
Smits Drukkers-Uitgevers.
Khan, J. 1991. Public Administration in the Caribbean, Typescript.
Murray, D. J. 1981. “Microstates: Public Administration for the Small and Beautiful.”
Public Administration and Development, Vol. 1, No. 3: 245-56.
Schahczenski, Jeffrey J. 1990. “Development Administration in the Small Developing
State: A Review. Public Administration and Development, Vol. 10: 69-80.
This paper focuses on certain aspects of the international behavior of very small states. The
approach of the paper is pre-empirical in that it does not advocate a specific scheme for
collecting and manipulating data on the external behavior of very small states. Rather, the
author addresses the problem of definition and identification of microstates and discusses a
number of factors which account for their general foreign policy orientations. The author
generates a number of hypotheses about the impact of very small size on foreign policy
behavior.
Sutton, Paul and A. Payne. 1993. “Lilliput Under Threat: the Security Problems of Small
Island and Enclave Developing States”, Political Studies, Vol. XLI (4): 579593.
Ullman, H. 1983. “Redefining Security”, International Security, Vol. 8(1).
18
Regional Cooperation & Integration
Caribbean Center for Monetary Studies, CARICOM Secretariat, and International
Monetary Fund. 1998. “Adjustment and Integration in Small Emerging
Economies (A Caribbean Community Agenda)”.
CARICOM Secretariat. 2000. “Experiences and Opportunities for Capacity Sharing
through Regional Cooperation and Integration: The Case of the Caribbean
Community (CARICOM)”. Paper presented at the Global Conference on the
Development Agenda for Small States, London, 17-18 February 2000.
Perroni, Carlo and John Whalley. 1994. The New Regionalism: Trade Liberalization or
Insurance? Working Paper No. 4626. Cambridge, MA: National Bureau of
Economic Research.
Rajapatirana, Sarath. 1995. Global Competitiveness and Regional Integration:
Implications for the Caribbean. World Bank Policy Research Working Paper.
Washington, DC: World Bank.
This paper examines the meaning of global competitiveness in the context of the Caribbean
and analyzes the ability of regional integration schemes to further this goal. The author argues
that CARICOM has not contributed to increased productivity and competitiveness and is
unlikely to do so in the future. He maintains that broader regional arrangements in the
Americas offer better opportunities. Nevertheless, it is unilateral reforms that appear most
promising for countries in the region. The author recommends that Caribbean nations pursue
short-run strategies to increase competitiveness through effective exchange rate management,
fiscal discipline, more flexible factor markets and diversification beyond the goods markets.
Long-term strategies include the development of human capital, technology acquisition, and
the promotion of foreign investment.
Secretariat of the Pacific Forum. 2000. “Sharing Capacity: the Pacific Experience with
Regional Cooperation and Integration”. Paper presented at the Global
Conference on the Development Agenda for Small States, London, 17-18
February 2000.
Sinclair, Noel G. 1992. “Linking Latin America and the Caribbean.” Caribbean Affairs,
Vol. 5, October-December: 1-16.
The author discusses the Latin American Economic System’s (SELA) role in promoting
increased integration between the Caribbean Community (CARICOM) and Latin America.
He notes that SELA has proposed initiatives concerning the NAFTA, the effects of the
European single market on the Caribbean countries, and the implications of the GATT. SELA
is also working to improve relations between Latin American sub-regions and the Caribbean.
SELA has sponsored studies linking NAFTA and CARICOM, and it is examining the exports
of Caribbean and Latin American bananas to Europe.
Taibai, Ieremia. 1985. “Regional Cooperation from the Perspective of a Small Island
State.” Pacific Perspective, Vol. 12, No. 1: 1-3.
19
Risk & Insurance
Auffret, Philippe, and Jacqueline Mora-Baez. 1999. Absence of Optimal Risk Sharing:
Large Costs for Developing Economies, Huge Costs for Caribbean Countries
and Small State, Draft, December 1999. Washington DC: World Bank.
Kamel, Nawal. 2000. “Commodity Risk Management in Developing Countries: A
Proposed Market-based Approach and its Relevance for Small States”. Paper
presented at the Global Conference on the Development Agenda for Small
States, London, 17-18 February 2000.
Pollner, John. 2000. The Management of Catastrophic Risks Using Pooled Insurance
Structures and Alternative Financing and Risk Transfer Mechanisms,
Working Paper. Washington DC: World Bank..
Townsend, Robert. 1995. “Consumption Insurance: An Evaluation of Risk-Bearing
Systems in Low-Income Economies.” Journal of Economic Perspectives 9(3):
83-102.
20
Size
Alesina, Alberto, and Enrico Spolaore. 1997. “On the Number and Size of Nations.”
Quarterly Journal of Economics. November 1997.
Amstrup, Niels. 1976. “The Perennial Problem of Small States: a Survey of Research
Efforts.” Cooperation and Conflict, Vol. 11, No. 4: 163-82.
Benedict, B., ed. 1967. Problems of Smaller Countries. London: Athlone Press.
Bognar, Jozsef. 1986. “Predicament of Small Industrial Countries.” New Hungarian
Quarterly, Vol. 27, Autumn: 18-30.
Bray, Mark. 1987. “Small Countries in International Development.” Journal of
Development Studies. Vol. 23, No. 2, January: 295-300.
de Vries, Barend A. 1973. “The Plight of Small Countries.” Finance and Development,
Vol. 10, No. 3, September: 6-8.
Dommen, Edward, ed. 1980. Islands. Oxford: Pergamon Press (originally a special issue
of World Development. 1980, Vol. 8, No. 12.)
Dommen, Edward and Philippe Hein, eds. 1985. States, Microstates and Islands.
London: Croom Helm, Ltd.
This book compiles a number of papers that address the particular needs and problems of the
small state. Essays cover: the definition of a microstate and its relation to the international
community; a review of the economic literature on microstates; an examination of
anthropological and sociological theories on smallness; an exploration of alternative
development paths for small island states; a report on the environmental and economic
viability of small islands; a summary of the conclusions of UNCTAD’s studies on the major
handicaps of island developing countries; an examination of the role of foreign trade in small
island economies; and a discussion of the problems that small countries face when developing
administrative structures and processes.
Eckhaus, R. 1997. “Is it Beautiful to be Small, or is it a Burden?” Journal of Eastern
Caribbean Studies, 22(4), pp.1-30.
Farrell, T. 1991. “The Concept of Small States Current Problems and Future Prospects:
with special reference to the Caribbean.”
Galbis, V. 1984. “Ministate Economies.” Finance and Development, June, pp. 36-38.
Jalan, B. 1982. “Classification of Economies by Size,” in Jalan, B. (ed.), Problems and
Policies in Small Economies. London: Croom Helm Ltd.
Khalaf, Nadim G. 1976. “Country Size and Economic Instability.” The Journal of
Development Studies, Vol. 12: 423-428.
Legarda, Benito. 1984. “Small Island Economies.” Finance and Development, Vol. 21,
June: 42-43.
Lloyd, P.J., and R.M. Sundrum. 1982. “Characteristics of Small Economies,” in Jalan, B.
(ed.), Problems and Policies in Small Economies. London: Croom Helm Ltd.
The author begins by evaluating various measures of country size and settles on population as
the most serviceable measure. He then goes on to find that for the set of countries he has
21
designated as small, there is considerable diversity in terms of the quantity and nature of their
resource endowments. He contends that it may not be possible to evolve a general theory of
small countries for the purposes of analyzing growth options of specific economies. The one
aspect of smallness which may best characterize these countries is the concentration of
national output in a few industries and a few commodities. While this is economically
significant, it is also important to consider other characteristics of these countries such as their
remoteness and their limited human resources.
Looney, Robert E. 1989a. “Profiles of Small, Lesser Developed Economies.” Canadian
Journal of Development Studies, Vol. 10, No. 1: 21-37.
This paper examines whether, and in what manner, smaller developing countries differ from
their larger counterparts in areas other than size and in addition to the commonly noted
characteristics such as concentration of exports in GDP. The paper attempts to answer the
question: has smallness tended to produce a different growth mechanism from that
experienced by larger economies? One of the study’s main findings is that the public sector
accounts for a considerably larger share of GDP in small countries; the share of public sector
consumption in GDP was the most statistically significant economic variable found in
differentiating large from small countries. However, increasing the share of the public sector
in the economy has tended to reduce overall rates of growth in small countries and has left in
its wake relatively large external public sector debts.
Looney, Robert E. 1989b. “Macroeconomic Consequences of the Size of Third World
Nations: With Special Reference to the Caribbean.” World Development,
17(1), 69-83.
Looney, Robert E. 1992. “Economic Characteristics Associated with Size: Development
Problems Confronting Smaller Third World States.” Singapore Economic
Review, Vol. 37, No. 2, October: 1-19.
This paper examines whether small developing countries have a unique set of characteristics
other than size that tends to set them apart from developing countries as a whole. The authors
conclude that smallness appears to be a constraint on growth in two regards: momentum and
the effectiveness of government expenditures. Small countries can be defined as those states
that are incapable of sustaining growth from one time period to another and/or those countries
that are not capable of stimulating their economies through cutting defense expenditures.
Milner, C., and T. Westaway. 1993. “Country Size and the Medium-Term Growth
Process: Some Cross-Country Evidence.” World Development, 21(2), 203211.
Pantin, Dennis. 1994. The Economics of Sustainable Development in Small Caribbean
Islands. Trinidad and Tobago: University of the West Indies, Center for
Environment and Development.
Persaud, B. 1986. “Small States: Economic Problems and Prospects.” Bulletin of Eastern
Caribbean Affairs, 12(5), 1-11.
Reid, George L. 1974. The Impact of Very Small Size on the International Behavior of
Micro-States. Beverly Hills, CA: Sage Publications.
Robinson, E.A.G., ed. 1963. Economic Consequences of the Size of Nations. London:
MacMillan.
This book is a compilation of papers presented at a conference held by the International
Economic Association in Lisbon, Portugal in 1957. The conference was mainly concerned
22
with the problems of small European economies which were already at an advanced stage of
development (as the number of independent developing countries at that time was relatively
small.) Subjects include the following: a definition of the problems faced by small countries;
case studies of efficient large and small nations; a discussion of economies of scale; an
examination of the size of the economy and its relation to stability and steady economic
growth; the relationship between a country’s size and the cost of administration; and a
discussion of foreign trade as an escape from the constraints of smallness. This book is often
cited as one of the classic works written on the special problems affecting small countries.
Selwyn, Percy. 1978. Small, Poor and Remote: Islands at a Geographical Disadvantage.
Discussion Paper No. 123. Sussex: Institute of Development Studies.
Selwyn, P. 1980. “Smallness and Islandness.” World Development, 8 (12), pp.945-951
Shand, R.T. 1980. “Island Smallness: Some Definitions and Implications,” in Shand,
R.T., The Island States of the Pacific and Indian Oceans: anatomy of
development. Monograph No. 23. Canberra: Australian National University,
Development Studies Center.
Sommen, Edward, ed. 1980. “Islands.” World Development, December.
Srinivasan, T.N. 1986. “The Costs and Benefits of Being a Small, Remote, Island,
Landlocked or Ministate Economy.” World Bank Research Observer, 1(2),
205-218.
The paper begins with a discussion of the definition of a small economy and then attempts to
answer the question of whether or not small countries have special problems not faced by
larger developing nations. In answering this question, the author evaluates the following
arguments that are most commonly put forth regarding the problem of smallness:
diseconomies of scale; vulnerability to natural disasters and external economic shocks;
geographical remoteness; limited access to private foreign capital; lack of macroeconomic
policy independence; and overstatement of income due to higher transportation costs. The
author concludes that many of the problems allegedly face by small economies are either not
unique to them or can be addressed through suitable policy measures. Therefore, he suggests
that several indexes of development and welfare be used in determining whether a country
should receive aid and trade concessions.
Streeten, P. 1993. “The Special Problems of Small Countries.” World Development,
21(2), 197-202.
Townsend, Robert. 1993. The Medieval Village Economy: A Study of the Pareto Mapping
in General Equilibrium Models. Princeton, N.J.: Princeton University Press.
23
Trade & Transition
Agenor, Pierre Richard. 1991. “Protection, Trade Liberalization and Resource Allocation
in a Small Open Economy: A General Equilibrium Simulation Analysis”
(Haiti). Journal of Economic Development, Vol. 16, No. 1, June: 69-103.
Alam, Asad and Sarath Rajapatirana. 1993. Trade Policy Reform in Latin America and
the Caribbean in the 1980s. World Bank Policy Research Working Paper
1104. Washington, DC. World Bank, Latin America and the Caribbean
Technical Department.
The authors examine the wide-ranging and fundamental trade reforms undertaken by 16 Latin
American and Caribbean countries during the 1980s. These reforms were undertaken during
periods of severe economic crisis and uncertainty, and they dramatically altered the nature of
the trade regimes in these countries. All the trade reforms were preceded or accompanied by
restrictive fiscal and monetary policies and by devaluations of the real exchange rate. In most
countries the reforms began under the auspices of democratically elected governments, despite
resistance. The authors conclude that the success of a trade reform depends on bold and
consistent implementation, complementary macroeconomic and exchange rate policies, and
political will and resilience.
Balassa, Bela. 1969. “Country Size and Trade Patterns: Comment.” American Economic
Review, March: 201-204.
The author refutes Keesing’s assertion that small countries suffer a disadvantage with regard
to trade and industrial development. Keesing’s findings are criticized on the basis that his
statistical tests cannot be used to establish his proposition. The author also argues that
Keesing’s formulation is not appropriate for the problem at hand and proceeds to formulate
and test alternative hypotheses concerning the relationship between country size and trade
patterns. The author finds that small countries tend to have a comparative advantage in semimanufactures and a disadvantage in finished manufactures. These findings support the thesis
that small countries are likely to gain the most from trade liberalization and regional
integration because their opportunities will tend to be equalized with those of larger nations.
(See Keesing, Donald B. 1968. “Population and Industrial Development: Some Evidence
from Trade Patterns.” American Economic Review, June: 448-55.)
Bernal, Richard L. 1998. “Small Economies in the World Trade Organization,” mimeo.
April 1998.
Bernal, Richard L. 1998. “The Integration of Small Economies in the Free Trade Area of
the Americas,” CSIS Policy Papers on the Americas, Volume IX. February
1998.
Bourne, Compton and Wallace Joefield-Napier. 1983. “Export Performance and
Prospects for the Commonwealth Caribbean.” In Antonio Jorge, Enrique P.
Sanchez and Jorge Salazar-Carillo, eds. Latin American Trade and Economic
Growth. New York: Pergamon Press.
The economies of the Commonwealth Caribbean performed unimpressively during the 1970s
for a variety of reasons including sharp increases in primary energy prices and a recession in
the OECD countries. In addition, economic growth in the region has been constricted by
import restraint policies; these policies have also adversely affected the growth of intraregional trade. Because balance of payments adjustment via import restraint has been
24
counterproductive, export expansion has been advocated as an appropriate alternative strategy.
This paper assesses the prospects for growth of Commonwealth Caribbean exports of goods
and services. It does so in the context of the current structure of the region’s exports and
against a background of the importance of export performance to the balance of payments,
output and prices.
Bryan, Anthony. 1994. “The Caribbean Community in a Post-NAFTA World: Facing the
Free Trade Dilemma.” North-South Focus, Vol. 3: 6-12.
The author suggests that the effects of free trade on the Caribbean Community (CARICOM)
may be unequal and that countries must devise adequate plans to deal with greater economic
disequilibrium. The author also maintains that the NAFTA will pose a new threat to the niche
markets that have developed as a result of the Caribbean Basin Initiative (CBI). The CBI
provides for duty-free exports to the U.S. and as a result acts as more of a deterrent than an
impetus to economic restructuring. The author urges countries to overcome the economic
complacency engendered by the CBI by promoting not only trade integration but productive
integration as well. Includes a graph illustrating CARICOM’s 1990 imports and exports.
Buitelar, Rudolf and Juan Alberto Fuentes. 1991. “The Competitiveness of the Small
Economies of the Region.” Cepal Review, Vol. 43, April: 83-96.
Canitrot, A. and S. Junco. 1993. Macroeconomic Conditions and Trade Liberalization.
Inter-American Development Bank publication, ISBN No. 0-940602-66-0, E.
This work considers the effects of different macroeconomic conditions on the liberalization of
the economies in Argentina, Chile, and Uruguay. The authors conclude that the elimination of
the public sector deficit is essential to the success and sustainability of trade liberalization.
Center for Studies and Research on International Development (University of Clermont,
France). 1989. Mali: Economic Policy and International Trade. Country
Study prepared for the World Bank/UNDP Trade Expansion Program.
Washington, DC: World Bank, Trade Policy Division.
Codrington, Harold and DeLisle Worrell. 1989. “Trade and Economic Growth in Small
Developing Economies: Research on the Caribbean.” In DeLisle Worrell and
Compton Bourne, eds., Economic Adjustment Policies for Small Nations:
Theory and Experience in the English-Speaking Caribbean. New York and
London, Greenwood Press, Praeger.
This paper begins with an overview of the trade issues that have been of concern to Caribbean
countries. This is followed by a review of the factors that influence trade patterns and of the
relationship between trade and growth. The third section examines economic cooperation
among Caribbean countries and discusses the intentions and contributions of the regional
integration movement. The next section reviews exchange rate adjustment issues and the
management of foreign reserves. The final section is a survey of empirical results from
studies of Caribbean trade and payments.
Connolly, Michael and Jaime de Melo, eds. 1994. The Effects of Protectionism on a
Small Country: The Case of Uruguay. World Bank Regional Sectoral Studies.
Washington, DC: World Bank.
Demetriades, P., A. Al-Jebory and G. Kamperis. 1993. “Manufacturing Exports,
Economic Growth and the Current Account in a Small Island Economy:
Simulation Results from an Econometric Model for Cyprus.” World
Development, Vol. 21, No. 2: 259-68.
25
Dixit, Avinash and Henryk Kierzkowski. 1987. “Issues of Strategic Trade Policy for
Small Countries.” Scandinavian Journal of Economics, Vol. 89, No. 3: 34971.
Dommen, Edward. 1983. Invisible Exports from Islands. Discussion Paper No. 9.
Geneva: UNCTAD
Donnenfeld, Shabtai and Seev Hirsch. 1993. “Marketing Cost Differentials, Economies
of Scale, and the Competitiveness of Small-Country Producers.” International
Trade Journal, Fall: 549-68.
The paper examines the effect of marketing cost differentials on the ability of small countries
to compete with large-country producers in goods manufactured under economies of scale. It
is shown that the presence of scale economies does not necessarily retard the performance of
small-country producers unless export marketing costs exceed domestic marketing costs.
When economies of scale are present simultaneously with differences between export and
domestic marketing costs, small countries with more efficient producers may be unable to
export to large countries served by less efficient local producers. Furthermore, the latter may
end up exporting to the former. The policy implication is that subsidization of exports in
conjunction with restrictions on domestic prices enhances national welfare
Ebrill, Liam, Stotsky, Janet, and Reint Gropp. 1999. Revenue Implications of Trade
Liberalization. Occasional Paper 190. Washington DC: International
Monetary Fund.
Edwards, Sebastian. 1993. Trade Policy, Exchange Rates and Growth.(Latin America)
National Bureau of Economic Research Working Paper No. 4511, October.
Frankel, Jeffrey A., and David Romer. 1999. Does Trade Cause Growth?. American
Economic Review 89(3), 379-99.
Garay, L. and A. Estevadeordal. 1995. Protection, Preferential Tariff Elimination and
Rules of Origin in the Americas, June. Washington, DC: Inter-American
Development Bank.
This essay presents an overview of the main characteristics of existing protection policies in
the hemisphere and of the impediments to achieving the necessary degree of convergence for
an integrated market. The authors examine tariff and non-tariff barriers as well as trade
policies that grant preferential access to imports of goods originating in countries that have
entered into integration agreements. Attention is also given to the rules and regulations
governing the eligibility of goods for preferential trade concessions in the context of subregional agreements.
Greenaway, David and Chris Milner. 1993. The Fiscal Implications of Trade Policy
Reform: Theory and Evidence. UNDP-World Bank Trade Expansion Program
Occasional Paper No.9, November. Washington, DC: World Bank, Trade
Policy Division
Grynberg, Roman. 1999. “Trade Implications for Vulnerable States of the Global Trade
Regime.” Paper presented at the Conference on Small States, St. Lucia,
February 17-19, 1999.
Grynberg, Roman. 2000. “The Pacific Island States and the WTO: Towards a PostSeattle Agenda for the Small Vulnerable States”. Paper presented at the
26
Global Conference on the Development Agenda for Small States, London, 1718 February 2000.
Guasch, J. Luis, and Sarath Rajapatirana. 1994. The Interface of Trade, Investment, and
Competition Policies, Policy Research Working Paper No. WPS 1393.
Washington: World Bank, Latin America and the Caribbean Technical
Department.
Gylfason, T. 1999. “Exports, Inflation and Growth.” World Development, 27(6), pp.
1031-1057.
Havrylyshyn, O. 1990. “Trade Policy and Productivity Gains in Developing Countries:
A Survey of the Literature.” The World Bank Research Observer.
Washington, DC: World Bank.
Keesing, Donald B. 1988. The Four Successful Exceptions: Official Export Promotion
and Support for Export Marketing in Korea, Hong Kong, Singapore, and
Taiwan, China. UNDP-World Bank Trade Expansion Program Occasional
Paper No. 2., September. Washington, DC: World Bank, Trade Policy
Division.
Khalaf, Nadim G. 1974. “Country Size and Trade Concentration.” Journal of
Development Studies, Vol. 11, October.
This paper provides some evidence on the nature of the relationship between country size and
commodity and geographic concentration in trade. It also examines the effects of economic
development and dependence on trade on this relationship. The study suggests that the inverse
relationship between country size and trade concentration is not as strong as a priori reasoning
suggests. The author also finds that there is no association between export concentration and
economic development, nor between export concentration and dependence on trade. In
addition, he finds that small countries’ dependence on trade does not lead to extra export
concentration, nor does their export concentration constitute an impediment to economic
development.
Kirkpatrick, C. 1995. “Does Trade Liberalization Assist Third-World Industrial
Development? Experience and Lessons of the 1980s.” International Review
of Applied Economics, Vol. 9, No. 1: 22-41.
Lal, Deepak and Sarath Rajapatirana. 1989. Impediments to Trade Liberalization in Sri
Lanka. Brookfield, VT: Gower Publishing Co.
Leamer, Edward E., Alfonso Guerra, Martin Kaufman and Boris Segura. 1995. How
Does the North American Free Trade Agreement Affect Central America?
World Bank Policy Research Working Paper No. 1464, Latin America and the
Caribbean, Country Department II, Country Operations Division. Washington,
DC: World Bank.
NAFTA seems like a very troubling agreement for Central America, especially in apparel and
textiles. Losses from NAFTA depend on the economic size of Mexico. The authors maintain
that Central America can gain from NAFTA provided that Mexico is “big enough” to satisfy
completely U.S. import demands and that Central America can redirect its products from the
U.S. to Mexican markets.
27
Lewis, David E. 1991. “The North American Free Trade Agreement (NAFTA) and Its
Impact on the Caribbean Basin Economies.” Caribbean Studies, Vol. 24: 99116.
In this essay the author contends that the NAFTA will adversely affect the Caribbean Basin by
displacing trade and decreasing the relative benefits of tariff preference schemes. He outlines
NAFTA and the “Enterprise of the Americas Initiative” and concludes that Caribbean nations
must become involved in free trade negotiations to safeguard the benefits of the Caribbean
Basin Initiative. In addition, Caribbean countries should, as a group, target other markets, such
as Latin America. He points to non-reciprocal trade agreements with Mexico and Venezuela
as examples. Includes a chronology, along with a list of the pros and cons of NAFTA, a table
and a bibliography.
Lloyd, Peter J. 1968. International Trade Problems of Small Nations. Durham, NC:
Duke University Press.
This book attempts to develop a theory of small nation trading by presenting and debating
several different models. Where possible, empirical studies and statistics are used to confirm
or refute hypotheses. The book includes a discussion of international specialization; foreign
trade multipliers and the balance of payments in small nations; devaluation in small countries;
the Graham model of international trade; economies of scale and country size; and the gains
and losses associated with the formation of customs unions and free trade areas for small
nations. The primary objective of the book is to determine whether small nations form a
distinctive group that exhibits certain features in common and, if so, to examine how these
features may affect the nations’ behavior in certain circumstances. The author concludes that
small countries are a heterogeneous group which do not have uniform trade characteristics and
cannot be expected to behave in the same way under similar circumstances.
Michaely, Michael. 1995. Trade-Preferential Agreements in Latin America: An Ex-Ante
Assessment, Draft World Bank Working Paper. Washington, DC: World
Bank, Latin America and Caribbean Region.
This paper examines the relevance and desirability of multilateral free trade agreements for the
Latin American and Caribbean continent. The author discusses the relationship of Latin
American and Caribbean countries with NAFTA and with the U.S. The paper is concerned
primarily with the economic rationale and economic impact of FTAs and ignores the political
considerations that often weigh heavily in the minds of policy makers. The analysis is
confined to the effects on and of trade flows, and the observations are confined to free trade
areas rather than customs unions. Although the paper relies heavily on quantitative indicators,
the author aims to reach a qualitative assessment with a view to making an ex ante judgment
on whether a preferential agreement among Latin American countries is likely to be more or
less meaningful than other kinds of agreements.
Michaely, Michael, and Dimitiris Papageorgiou. 1998. “Small Economies, Trade
Liberalization, Trade Preferences and Growth.” Iberoamericana: Nordic
Journal of Latin American and Caribbean Studies 28(1-2): 121-59. Stockholm
University, Institute of Latin American Studies.
Michaely, M., D. Papageorgiou, and A. Choksi. 1991. Liberalizing Foreign Trade,
Lessons of Experience in the Developing World. Cambridge, MA: Basil
Blackwell. Chile and Uruguay (Vol. 1); Singapore (Vol. 2); Israel (Vol. 3);
Sri Lanka (Vol. 5); New Zealand (Vol. 6).
28
This study reviews the liberalization experiences in 19 countries, a number of which are small
economies. Volume 7 presents the synthesis of these country analyses and discusses the
general principles that emerged from the successful reforms. Among the many conclusions
drawn from the evidence are the following: boldness of reform and momentum lead to more
durable liberalization programs; programs that reduced quantitative restrictions generally
succeeded while those that did not tended to fail; most of the successful programs began with
a depreciation of the real exchange rate; successful reformers pursued prudent macroeconomic
policies; reforms tended to fail when capital market liberalization preceded trade
liberalization; and political stability was crucial to sustainable reform. The study also includes
some specific findings on small economies. The authors find that geographical size had a
significant influence on the long-term outcome of trade liberalization. Almost all of the
countries that persevered in their attempts to liberalize are either small or medium sized;
almost all the large countries are not among the liberalizers. In terms of economic structure, a
country’s share of manufacturing, either in production or in exports, seems not to have any
effect on its success as a liberalizer.
Mussa, Michael. 1987. “Macroeconomic Policy and Trade Liberalization: Some
Guidelines.” World Bank Research Observer, Vol. 2, No. 1, January: 61-77.
Organization for Economic Cooperation and Development. 1994. The Benefits of Free
Trade: East Asia and Latin America. Organization for Economic Cooperation
and Development.
Paridon, C.W. and J. W. Nelson. 1982. “Trade Relations between Large and Small
Countries: Equal or Unequal?” Planning and Development (Netherlands),
Vol. 14, No. 2: 184-204.
Rajapatirana, Sarath. 1994a. The Evolution of Trade Treaties and Trade and Trade
Creation: Lessons for Latin America. World Bank Policy Research Working
Paper No. 1371, October.
This paper examines the main distinctions between trade liberalization under the GATT and
under regional trading agreements. Under the GATT, trade liberalization is based on the most
favored nation principle (MFN); under regional trade agreements, it is based on preferential
trade. Regional trade agreements carry with them the danger of trade diversion. The author
proposes several policy measures for Latin American countries to follow in order to reduce
trade diversion in their regional agreements. These include: continued liberalization
according to the MFN principle; establishment of common markets rather than FTAs;
coordination of regulatory and competition policies; facilitation of new partner memberships;
improvement of communications and transportation systems; and low initial protection
measures.
Rajapatirana, Sarath. 1994b. Post Trade Liberalization Policy and Institutional
Challenges in Latin America and the Caribbean. World Bank Policy Research
Working Paper No. 1465. Latin America and the Caribbean Technical
Department. Washington, DC: World Bank.
This paper examines the experiences of Argentina, Chile, Colombia, Jamaica, Uruguay, and
Trinidad and Tobago with a view towards identifying post trade liberalization policy and
institutional challenges. The author contends that to maintain liberal trade and advance the
agenda for more open trade, economic policy must prevent external shocks from becoming
crises, and protection must remain uniform among sectors. Trade policymaking institutions
must be able to deal with changes in the political equilibrium that may result from external
shocks or from the lobbying power of groups seeking exceptions from uniform protection.
29
Salazar-Carrillo, Jorge and Irma Tirado de Alonso. 1984. “Trade, Debt and Development
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Basin, IESCARIBE Research Summaries, No. 2. Institutes of Economic and
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Segal, Aaron. 1993. “Opciones Comerciales del Caribe: Las Cartas de Europa, América
del Norte y América Latina.” Comercio Exterior, Vol. 43, November: 101930.
This essay surveys Caribbean countries’ trade relations with Europe, Canada, the U.S., and
Latin America. The Caribbean has traditionally been dependent on preferential trade
agreements, including the Lomé Convention with the European Community and the Caribbean
Basin Initiative with the U.S. The North American Free Trade Agreement threatens to
undermine the region’s privileged relationship with the U.S. The author suggests that the
Caribbean countries join the GATT and expand ties with Latin America in order to improve
the region’s trade prospects. Tables are included.
Shepherd, Geoffrey and Carlos Geraldo Langoni, eds. 1991. Trade Reform: Lessons
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Paper presented at the International Conference on Islands and Small States
held at the University of Malta on May 23-25, 1991
This paper analyzes current trade policy with a view to determining what future policy should
be in the face of a possible “banana shock.” The author contends that trade policy as it impacts
the OECS countries is important but precarious and potentially inhibiting. It is precarious
because so much is dependent upon trade preferences, which, unilaterally offered, can be
unilaterally withdrawn. It is potentially inhibiting because the CARICOM policy of
encouraging intra-Caribbean trade by a high common external tariff is a doubtful strategy for
the OECS countries, given their dependence on extra-regional markets and the price and cost
implications of high tariffs on export goods, including tourism. The author concludes that
high tariffs, quantitative restrictions, stamp duties and other interferences with trade are
especially inappropriate in the current situation. Not only do they work against the growth
and development of the export sector by favoring the import-substitution and non-traded
goods sectors, but also they will prevent any needed adjustment in the event of a banana
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30
Stevens, Christopher, Matthew McQueen, and Jane Kennan 1999. “After Lomé IV: A
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to Socialism. New York: Monthly Review Press.
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This book brings together a variety of evidence on developing countries’experience with trade
policy reform. The analysis relies on country studies, cross-sectional data, and interviews
with practitioners. The study focuses on trade policy reform during structural adjustment with
an emphasis on the experience of he 1980s. The authors discuss the extent and types of policy
changes aimed for in adjustment programs, the flexibility of program design in adapting to
conditions found in individual economies, and the success of their implementation. The study
addresses the effectiveness of trade liberalization in increasing economic efficiency and
growth as well as the political dynamics of domestic interest groups affected by the reforms.
The authors offer recommendations on the timing and pace of trade reform programs and
discuss the inconsistencies and complementarities between trade policy reform and budget
stabilization. The study includes a review of the export performance for manufactured exports
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Consideration is also given to improving a developing country’s trade position through
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This essay uses a gravity equation to analyze the pattern of the trade flows in the Caribbean
Basin. Economic integration in the Caribbean Basin has been viewed as a way to enlarge
domestic markets and to diversify the productive base of the countries, thereby lowering their
vulnerability to the fluctuations of primary product prices. This study does not attempt to
develop a model from which the gravity equation is derived. Rather, the analysis identifies
those types of economic integration that are most likely to generate trade. The authors
conclude that those integration arrangements that lowered trade barriers appear to have had a
substantial impact on intra-Basin exports while LAFTA has failed to promote trade
significantly within the region.
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and Breach.
31
Vuskovic, C., Pedro and René M. Escoto. 1990. PPP: Pequeños Países Periféricos en
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III, Latin America and the Caribbean Region.
The purpose of this study is to develop a proposal for a consistent longer-term action program
for implementing an export-oriented growth strategy in the Caribbean region. Emphasis is
placed on devising a framework for a common approach which is adaptable to each member’s
particular conditions. The proposal is based on a detailed assessment of the structure and
performance of key sectors. The analysis focuses in particular on trade-related issues and
policies. Attention is also paid to the experience with regional economic cooperation and to
planned regional reforms in order to determine whether the current regional agreements are
consistent with a longer-term strategy of export oriented growth and what type of regional
support can best further the implementation of this strategy.
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World Bank (SecM2000-97), Trade Policy for Development and Poverty Reduction,
Draft, March 2000.
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Transport
Parsan, E. 1991. “The International Transport Problems of Small States”, Paper presented
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Rapid Change’, St. Kitts, 25-27 March, 1991.
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Vulnerability
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presented at the Conference on Small States, St. Lucia, February 17-19, 1999.
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UNDRO: Geneva.
34