Building the economic resilience of small states

Abstract

This book is an outcome of the research work undertaken as a result of the growing collaboration between the Commonwealth Secretariat and the Islands and the Small States Institute of the University of Malta. The book attempts to explain what needs to be done to enable inherently vulnerable small states build up their economic r:esilience in order to withstand economic shocks. The emphasis is therefore on policies that promote macroeconomic stability and microeconomic policies that enhance flexibility in market adjustment. Many authors of the chapters, however, rightly argue that economic resilience does not exclusively depend on economic factors only. Good governance, social cohesion and environmental management are also assigned major importance for resilience building. The focus of the book is on small states, where the issue of resilience is of major importance, given that such states tend to be highly exposed to external shocks. The high degree of vulnerability of such states to external shocks has now been amply discussed and proven in various publications and international fora held on this matter. This volume takes the argument further by attempting to show that it may be possible to withstand such vulnerability by adopting the right policies. The thrust of the argument is that it is not enough to identify the weaknesses - of more importance, perhaps, is to propose ways and means of overcoming such weaknesses. One of the chapters in this volume attempts to construct a resilience index, in order to assess the extent to which countries have adopted measures to enable them to withstand external economic shocks. The chapter may also be considered as a response to the strategy adopted at the Mauritius International Meeting on the la-year review of the Barbados Programme of Action, held in January 2005, which called on the international community to give due consideration to the development of a resilience index. (Extract from the Foreword to this book)