Some characteristics of small economies

Abstract

It cannot be stated that small economies are generally richer or generally poorer than large economies. Out of a total of fifty five economies with a population of less than one million. the World Bank classifies twenty two as High-income economies. with a GNP per capita comparable to those of OECD countries. twelve as Upper-middle-income economies, fourteen as Lower-middle income ones and the remaining seven as Low-income economies. This distribution of small economies in terms of GNP per capita shows quite clearly that there is considerable variation in their economic performance. However small economies do have certain similarities in view of their size. In this paper four issues associated with small economies will be dealt with. These are degree of dependence on foreign trade the degree of concentration on a few exponed types of goods or services and the size of the public sector and the special vulnerabilities of small island economies. Since we are dealing with small. as against large. economies. it is necessary to define what is a small in this regard, and the paper starts with a description of the indices used to rank countries in terms of size.