The competitiveness of small states : insights on flexible specialisation

Abstract

Against a historical background of institutional development planning, strategic (yet pragmatic) flexibility is a crucial component of small state governance. A “strategy of flexible adaptation” is deemed to be the best management and leadership style capable of securing the best achievable outcomes in the evolving or abruptly changing scenarios that characterise small states. The smaller the state or territory, the greater the likelihood that its domestic, internal affairs will be dominated, responsive to and driven by exogenous factors (including terms of trade, tourism trends, migration flows, remittances, aid and other ‘rents’). Governments and institutions in small states need to suggest leadership and foresight in the trajectory of development while being agile and nimble at grasping opportunities, if and when they may arise. This paper first traces the manner in which ‘flexible specialisation’ dictates and drives a considerable amount of actions and decisions in small jurisdictions. It then explores how these structural obligations nevertheless transform themselves into the nurturing and maintenance of competitive niches, each of which comes along with specific skill set and infrastructural requests.