Current trends in the socio-economic development of small island developing countries

Abstract

Taken as a whole, the economic performance of small states (defined here as those with populations of less than five million) has over the years been a good one. The GNP per capita of 34 of them grew at an overall annual average rate of over one per cent during the period 1980-91, more than twice that of developing countries as a whole. Their overall income (GDP per capita) is also well above the developing country average. But such figures can be deceptive, and for a variety of reasons the economies of small states are often fragile and show few of the linkages necessary for sustainable development. There are a variety of reasons for this. The small size of their domestic markets and resulting difficulty in generating scale economies mean a high degree of openness and vulnerability to external economic events; their narrow resource base encourages specialisation in a few products; their history has led to dependence on a few markets, accentuated by preferential trade agreements; their particular circumstances have resulted to reliance on concessional external financial flows; and their small populations have meant high per capita costs of providing government services, and shortages of certain skills. The impact of these characteristics on development can at times be pernicious and, therefore, some have called for the economies concerned to be treated as a special case of current development paradigms.