Small States, Big Problems: Small Solutions from Big Countries

Abstract

Several studies suggest that growth constraints in small states are not different from others and therefore they do not require special attention. In this article, we argue that this may not be so and therefore, the developed countries and donor agencies may have to reconsider special and differential treatments within the provisions of the WTO and establish a sustainable provision for small economies. Our analysis show that although trade liberalization provides positive stimulus for growth, small states endure high cost of doing business which have escalated following the withdrawal of differential treatments and this has had implications on small states performances. Further, these economies have been facing negative trade effects especially in the post–1995 period. Therefore, we suggest that small states have a strong case to argue for continued support in the form of adjustment and adaptation funds in order to develop institutions, infrastructure, capacity and competitive domestic exports.

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