Abstract
This chapter describes the structural and institutional characteristics of CARIFORUM economies. The dominant feature is their small size relative to the majority of countries in the world. Small developing economies have certain characteristics,1 such as a high degree of openness, limited diversity in economic activity, export concentration on one to three products, significant dependency on trade taxes, and small size of firms. Some developing countries and least developed countries, in general, may exhibit some of the characteristics listed as defining small developing economies. This has led some to argue that many of the problems attributed to small developing economies are not unique to them or can be addressed by appropriate policy measures and therefore smallness does not differentiate economies.2 However, careful analysis reveals that the characteristics, which small developing economies share with other types of developing countries, differ by degree between the different types of developing countries. What sets small developing economies apart and defines them as a distinct genre of developing country is the combination of characteristics and the degree or extent to which these characteristics predominate.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes
There is a view that small countries are so heterogeneous that they do not exhibit uniform characteristics and do not behave in the same way similar circumstances. See Peter J. Lloyd, International Trade Problems of Small Nations (Durham, NC: Duke University Press, 1968).
T. N. Srinivasan, “The Costs and Benefits of Being a Small, Island Landlocked, or Ministate Economy,” World Bank Research Observer 1, no. 2 (July 1986): 205–218.
Caribbean. Accelerating Trade Integration: Policy Options for Sustained Growth, Job Creation, and Poverty Reduction (Washington, DC: World Bank, 2009), 35.
Edgardo M. Favaro and David Peretz, “Introduction,” in Small States, Smart Solutions: Improving Connectivity and Increasing the Effectiveness of Public Services, ed. Edgardo M. Favaro (Washington, DC: World Bank, 2008), 4.
J. Love, “Commodity Concentration and Export Earnings Instability: A Shift from Cross-section to Time Series Analysis,” Journal of Development Economics 24 no. 2 (1986): 239–248.
Marion Jansen, “Income Volatility in Small and Developing Countries,” WTO Discussion Paper (Geneva: WTO, December 2004), 5.
M. Ayhan Kose and Eswar S. Prasad, “Thinking Big,” Finance and Development 39, no. 4 (December 2002): 38–41.
Irving W. Andre and Gabriel J. Christian, In Search of Eden: The Travails of a Caribbean Mini State (Roseau: Pond Casse Press, 1992), 209.
Barbara Welsh, “Banana Dependency: Albatross or Lifeline for the Windwards,” Social and Economic Studies 43, no. 1 (March 1994), 123–149. See p. 136.
George Beckford, Persistent Poverty: Underdevelopment in Plantation Economies of the Third World (Oxford: Oxford University Press, 1972).
Peter N. Davies, Fyffes and the Banana: Musa Sapientum. A Centenary History 1888–1988 (London: Athlone Press, 1990).
Gerald K. Helleiner, Intra-firm Trade and the Developing Countries (London: Macmillan, 1981).
Norman Girvan, Corporate Imperialism: Conflict and Expropriation: Transnational Corporations and Economic Nationalism in the Third World (New York: Monthly Review Press, 1976).
Anne Simpson and Chris Lee, Whose Gold? Geest and the Banana Trade (London: Latin American Bureau, 1990).
Peter Glegg, The Caribbean Banana Trade: From Colonialism to Globalization (New York: Palgrave, 2002), 79.
Lino Briguglio, “Small Island Developing States and Their Economic Vulnerabilities,” World Development 23, no. 9 (1995): 1615–1632;
Jonathan P. Atkins, Sonia Mazzi, and Christopher D. Easter, “Small States: A Composite Vulnerability Index,” in Small States in the Global Economy, ed. David Peretz, Rumman Faruqi and Eliawony J. Kisanga (London: Commonwealth Secretariat, 2001), 53–92.
Anthony Gonzales, “Policy Implications of Smallness as a Factor in the Lome, FTAA and WTO Negotiations,” Caribbean RNM/IDB Regional Technical Cooperation Project No. ATN/JF/SF-6158-RG (September 2000).
Chris Becker, “Small Island Sates in the Pacific: the Tyranny of Distance,” IMF Working Paper, WP/12/223 (Washington DC: International Monetary Fund, September, 2012).
Jonathan P. Atkins, Sonia Mazzi, and Christopher D. Easter, “Small States: A Composite Vulnerability Index,” in Small States in the Global Economy, ed. David Peretz, Rumman Faruqi, and Eliawony J. Kisanga (London: Commonwealth Secretariat, 2001), 63.
Lino Briguglio, “Small Island Developing States and Their Economic Vulnerabilities,” World Development 23, no. 9 (1995): 1615–1632.
Chris Milner and T. Westaway, “Country Size and the Medium-Term Growth Process: Some Cross-country Evidence,” World Development 21, no. 2 (1993): 203–211;
H. W Armstrong and R. Read, “Trade and Growth in Small States: The Impact of Global Trade Liberalization,” World Economy 21, no. 4 (June 1998): 563–585.
Nita Thacker, Sebastian Acevedo, and Roberto Perrelli, “Caribbean Growth in an International Perspective: The Role of Tourism and Size,” IMF Working Paper WP/12/235 (Washington, DC: International Monetary Fund, September 2012), 16.
Overcoming Volatility: Economic and Social Progress in Latin America, 1995 Report (Washington, DC: Inter-American Development Bank, 1995), 194–195; Holger Wolf, “Volatility: Definitions and Consequences,” in Managing Economic Volatility and Crises: A Practitioner’s Guide, ed. Joshua Aizenman and Brian Pinto (Cambridge: Cambridge University Press, 2005), 45–64.
William Easterly and Aart Kraay, “Small States, Small Problems? Income, Growth and Volatility in Small States,” World Development 28, no. 11 (2000): 2013–2027;
Viktoria Hnatkovska and Norman Loayza, “Volatility and Growth,” in Managing Economic Volatility and Crises. A Practitioner’s Guide, ed. Joshua Aizenman and Brian Pinto (Cambridge: Cambridge University Press, 2005), 65–100;
Garey Remy and Valerie A. Remy, “Cross-country Evidence on the Link between Volatility and Growth,” American Economic Review 85, no. 5 (December 1995): 1138–1151.
Joshua Aizenmann and Nancy Marion, “Volatility and Investment: Interpreting Evidence from Developing Countries,” Economica 66, no. 2 (1999): 157–181.
Dani Rodrik, “Why Do More Open Economies Have Bigger Governments?,” Journal of Political Economy 106, no. 5 (1998): 997–1032;
William R. Easterly, R. Islam, and Joseph Stiglitz, “Shaken and Stirred: Explaining Growth Volatility,” in Annual World Bank Conference on Development, ed. B. Plesokovic and Nicholas Stern (Washington, DC: World Bank, 2001).
Eduardo A. Cavallo, “Output Volatility and Openness to Trade: A Reassessment,” Research Department Working Paper Series No. 604 (Washington, DC: Inter-American Development Bank, 2007).
Mona E. Haddad, Jamus Jerome Lim, and Christian Saborowski, “Trade Openness Reduces Growth Volatility When Countries Are Well Diversified,” World Bank Policy Research Working Paper No. 5222 (Washington, DC: World Bank, February 2010).
William Easterly and Aart Kraay, “Small States, Small Problems? Income, Growth, and Volatility in Small States,” World Development 28, no. 11 (2000): 2013–2027.
Garey Ramey and Valery A. Ramey, “Cross-country Evidence on the Link between Volatility and Growth,” American Economic Review 86 (1995): 1138–1151.
William Easterly and Aart Kraay, “Small States, Small Problems? Income, Growth and Volatility in Small States,” World Development 28, no. 11 (2000): 2013–2027.
Marion Jansen, “Income volatility in Small Developing Economies: Export Concentration Matters,” WTO Discussion Paper (Geneva: WTO, December 2004).
Robert E. Looney, “Economic Characteristics Associated with Size: Development Problems Confronting Smaller Third World States,” Singapore Economic Review 37, no. 2 (October 1992): 1–19.
Chris Becker, “Small Island Sates in the Pacific: The Tyranny of Distance,” IMF Working Paper, WP/12/223 (Washington, DC: International Monetary Fund, September 2012), 10.
M. Ayhan Kose and Eswar S. Prasad, “Thinking Big,” Finance and Development 39, no. 4 (December 2002): 38–41;
Edgardo Favaro, Dorte Dömeland, William O’Boyle, and Tihomir Stucka, “Small States, the Financial Crisis, and the Aftermath,” in Sovereign Debt and the Financial Crisis: Will This Time Be Different?, ed. Carlos A. Prima Braga and Gallina Vincelette (Washington, DC: The World Bank, 2010).
Marion Jansen, “Income Volatility in Small Developing Economies: Export Concentration Matters,” WTO Discussion Paper (Geneva: WTO, December 2004).
Claudio E. Raddatz, “Are External Shocks Responsible for the Instability of Output in Low-income Countries?,” Journal of Development Economics 84, no. 1 (September 2007): 155–187.
Ransford Palmer, “Export Earnings, Instability, and Economic Growth, 1957 to 1986,” in External Linkages in Small Economies, ed. David L. Mckee (Westport: Praeger, 1994), 31–34.
Sebastian Sosa and Paul Cashin, “Macroeconomic Fluctuations in the Caribbean: The Role of Climatic and External Shocks,” IMF Working Paper WP/09/159 (Washington, DC: International Monetary Fund, July 2009).
Tobias N. Rasmussen, “Macroeconomic Implications of Natural Disasters in the Caribbean,” IMF Working Paper WP/04/224 (Washington, DC: International Monetary Fund, December, 2004), 7.
Martin Heger, Alex Julca, and Oliver Paddison, “Analysing the Impact of Natural Disasters in Small Economies: The Caribbean Case,” UNU-WIDER Research Paper No. 2008/25 (March 2008).
Charlotte Benson and Edward Clay with Franklyn V. Michael and Alistair W. Robertson, “Dominica: Natural Disasters and Economic Development in a Small Island State,” Disaster Risk Management Working Paper Series No. 2 (Washington, DC: World Bank, October 2001).
Stephen G. Hannaford, Market Domination! The Impact of Industry Consolidation on Competition, Innovation and Consumer Choice (Westport: Praeger Publishers, 2007), 23.
Hervé Ferhani, Mark Stone, Anna Nordstrom, and Seiichi Shimizu, “Developing Essential Financial Markets in Smaller Economies: Stylized Facts and Policy,” IMF Occaisional Paper No. 265 (Washington, DC: International Monetary Fund, 2009), ix.
Hervé Ferhani, Mark Stone, Anna Nordstrom, and Seiichi Shimizu, “Developing Essential Financial Markets in Smaller Economies: Stylized Facts and Policy,” IMF Occaisional Paper No. 265 (Washington, DC: International Monetary Fund, 2009), 6.
Jean-Christophe Dumont and Georges Lemaitre, Counting Immigrants and Expatriates in OECD Countries: A New Perspective (Paris: OECD, 2005), 14.
Richard L. Bernai, “Nano-firms, Integration and International Competitiveness: The Experience and Dilemma of the CSME,” in Production Integration in Caribbean: From Theory to Action, ed. Denis Benn and Kenneth Hall (Kingston: Ian Randle Publishers, 2006), 90–115.
William E. Northdurft, Going Global: How Europe Helps Small Firms Export (Washington, DC: Brookings Institution, 1992).
Lawrence Nicholson, “Jamaican Family-owned Businesses: Homogenous or Non-homogenous,” Social and Economic Studies 59, no. 3 (September 2010): pages 7–30.
Richard L. Bernai, “Nano-firms, Integration and International Competitiveness: The Experience and Dilemma of the CSME,” in Production Integration in Caribbean: From Theory to Action, ed. Denis Benn and Kenneth Hall (Kingston: Ian Randle Publishers, 2006), 90–115.
Small firms experience delays in undertaking R&D and product enhancement because of financial constraints; Giuseppe Scellato, “Patents, Firm Size and Financial Constraints: An Empirical Analysis for a Panel of Italian Manufacturing Firms,” Cambridge Journal of Economics 31, no. 1 (January 2007): 55–76.
Zoltan J. Acs, Randall Morck, J. Myles Shaver, and Bernard Yeoug, “The Internationalization of Small and Medium-sized Enterprises,” in Small and Medium-sized Enterprises in the Global Economy, ed. Zoltan J. Acs and Bernard Yeong (Ann Arbor: University of Michigan Press, 1999), 52.
Ganesh Wignarja, Marlon Lezama, and David Joiner, Small States in Transition: From Vulnerability to Competitiveness (London: Commonwealth Secretariat, 2004).
Ramesh Chaitoo, “Aid for Trade for Services in Small Economies: Some Considerations from the Caribbean,” in Aid for Trade and Development, ed. Dominique Njinkeu and Hugo Cameron (New York: Cambridge University Press, 2008), 300–313. See p. 304.
Donald B. Keesing, “Population and Industrial Development: Some Evidence from Trade Patterns,” American Economic Review 58, no. 3 (1968): 448–455.
Firms in small developing economies are discussed in Alvin G. Wint, Managing Towards International Competitiveness: Cases and Lessons from the Caribbean (Kingston: Ian Randle Publishers, 1997);
Alvin G. Wint, Competitiveness in Small Developing Economies: Insights from the Caribbean (Kingston: University of the West Indies Press, 2003).
The cost disadvantages suffered by small firms result from the lack of economies of scale, higher costs of inputs, and higher transportation cost. See L. Alan Winters and Pedro M.G. Martins, “Beautiful but Costly: Business Costs in Small Remote Economies,” (London: Commonwealth Secretariat, 2004).
For the opposing view, see Boris Blazic-Metzner and Helen Hughes, “Growth Experience of Small Countries,” in Problems and Policies in Small Economies, ed. B. Jalan (New York: St. Martin’s Press, 1982), 85–102.
Michael E. Porter, The Competitive Advantage of Nations (New York: Free Press, 1990), 71–73.
Christopher A. Bartlett and Sumantra Ghoshal, Managing across Borders (Boston: Harvard Business School Press, 1989).
Alan L. Winters and Pedro M. G. Martins, “Beautiful but Costly: Business Costs in Small Remote Economies,” (New York: St. Martin’s Press, 2004).
Barbara Graham, Profile of the Small Scale Farming in the Caribbean (Rome: Food and Argiculture Organization, 2012).
Dennis Pantin, The Economics of Sustainable Development in Small Caribbean Islands (Mona, Jamaica: Centre for Environment and Development, University of the West Indies, 1994), 16.
Alberto Alesina and Enrico Spolaore, The Size of Nations (Cambridge: MIT Press, 2003).
Stephanie Medina Cas and Rui Ota, “Big Government, High Debt, and Fiscal Adjustment in Small States,” IMF Working Paper WP/08/39 (Washington, DC: International Monetary Fund, February 2008).
Robert E. Looney, “Profiles of Small Lesser Developed Economies,” Canadian Journal of Development Studies 10, no. 1 (1989): 21–37;
Michael Howard, Public Finance in Small Open Economies: The Caribbean Experience (Westport: Praeger, 1992);
Alberto Alesin and Enrico Spolaore, The Size of Nations (Cambridge: MIT Press, 2003), chapter 10;
M. Ayhan Kose and Eswar S. Prasad, “Thinking Big,” Finance and Development 39, no. 4 (December 2002): 38–41.
Deryck R. Brown, “Institutional Development in Small Sates: Evidence from the Commonwealth Caribbean,” Halduskultuur-Administrative Culture 11, no. 1 (2010): 44–65.
See also R. Baler, “Scale and Administrative Performance: The Governannce of Small States and Microstates,” in Public Administration in Small and Island States, ed. R. Baker (Hartford: Kumarian Press, 1992), 5–25.
Giuseppe Scellato, “Patents, Firm Size and Financial Constraints: An Empirical Analysis for a Panel of Italian Manufacturing Firms,” Cambridge Journal of Economics 31, no. 1 (January 2007): 55–76.
O. Andersen and L. S. Kheam, “Resource-based Theory and International Growth Strategies: An Exploratory Study,” International Business Review 7, no. 2 (1998): 163–184.
“Food Safety and Agricultural Health Standards. Challenges and Opportunities for Developing Country Exports,” World Bank Report No. 31207 (Washington DC: World Bank, January 10, 2005), 62.
Denzil A. Williams, Understanding Exporting in the Small and Micro Enterprise (New York: New Science Publishers, 2009).
Rebecca Torres and Janet Henshall Momsen, “Challenges and Potential for Linking Tourism and Agriculture to Achieve Pro-poor Tourism Objectives,” Progress in Development Studies 4, no. 4 (October 2004): 294–318.
This is particularly the case in the smallest economies of CARIFORUM. See Ruby Randall, “Eastern Caribbean Tourism: Recent Development s and Outlook,” in The Caribbean: From Vulnerability to Sustainable Growth, ed. Ratna Sahay, David O. Robinson and Paul Cashin (Washington, DC: International Monetary Fund, 2006), 285–306.
Lino Briguglio, Bishnodat Persaud, and Richard Stern, Toward an Outward-oriented Development Strategy for Small States: Issues, Opportunities, and Resilience Building (August 2006), 5.
Paul Collier and David Dollar, Aid, Risk and the Special Concerns of Small States (Washington, DC: Development Research Group, World Bank, February 1999).
Paul Collier and David Dollar, “Aid, Risk and the Special Concerns of the Small states,” in Small States in the Global Economy, ed. David Peretz, Rumman Faruqi and Eliawony J. Kisanga (London: Commonwealth Secretariat/World Bank, 2001), 11–38.
Amos Peters, The Fiscal Effects of Tariff Reduction in the Caribbean Community (Georgetown: CARICOM Secretariat, 2002).
Gerald K. Helleiner, “Why Small countries Worry: Neglected Issues in Current Analyses of the Benefits and Costs of Small Countries of Integrating with Large Ones,” World Economy 19, no. 6 (November 1996): 759–763.
Copyright information
© 2013 Richard L. Bernal
About this chapter
Cite this chapter
Bernal, R.L. (2013). Characteristics of CARIFORUM Economies. In: Globalization, Trade, and Economic Development. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137356314_4
Download citation
DOI: https://doi.org/10.1057/9781137356314_4
Publisher Name: Palgrave Macmillan, New York
Print ISBN: 978-1-349-47716-6
Online ISBN: 978-1-137-35631-4
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)