THE SPECIAL PROBLEMS OF SMALL COUNTRIES

The paper describes the characteristics of small economies. and discusses the advantages and disadvantages arising from these characteristics. It is shown that small economies by their very nature tend to be less diversified and to have relatively high foreign trade risks. In spite of these drawbacks, a number of small economies have achieved high rates of economic growth. Some reasons given to explain this success are the relatively small size of the agricultural sector, concentration on labor-intensive exports, and sociological and psychological factors such as the ability to respond in a flexible manner to changes. The paper ends with a discussion on whether the drawbacks of small size can be overcome by economic integration. It is argued that the experience in this regard is disappointing.