[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/2139.html
   My bibliography  Save this paper

Small states, small problems?

Author

Listed:
  • Easterly, William
  • Kraay, Aart
Abstract
Small states have attracted a good deal of research. The authors test whether micro-states are any different from other states in income, growth, and volatility. They find that, controlling for location, smaller states are actually richer than other states in per capita GDP. This income advantage largely reflects a productivity advantage--evidence against the idea that micro-states are unable to exploit increasing rates of return to scale. Small states do not have different per capita growth rates, with or without controls. Their annual growth rates are more volatile, partly because of their greater volatility in responses to terms-of-trade shocks--to which they are exposed because of their greater openness pays off positively in growth. The authors do recommend that small states diversify their risk by opening up more to international capital markets, although the benefits of doing so are still unresolved in the literature. In general, they conclude, small states are nor different from large states and should receive the same policy advice large states do.

Suggested Citation

  • Easterly, William & Kraay, Aart, 1999. "Small states, small problems?," Policy Research Working Paper Series 2139, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2139
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/731471468766821640/pdf/multi-page.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Alberto Alesina & Enrico Spolaore, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1027-1056.
    3. Lewis, Karen K, 1996. "What Can Explain the Apparent Lack of International Consumption Risk Sharing?," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 267-297, April.
    4. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    5. Milner, Chris & Westaway, Tony, 1993. "Country size and the medium-term growth process: Some cross-country evidence," World Development, Elsevier, vol. 21(2), pages 203-211, February.
    6. S. Kuznets, 1960. "Economic Growth Of Small Nations," International Economic Association Series, in: E. A. G. Robinson (ed.), Economic Consequences of the Size of Nations, chapter 0, pages 14-32, Palgrave Macmillan.
    7. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
    8. Armstrong, H. & De Kervenoael, R. J. & Li, X. & Read, R., 1998. "A comparison of the economic performance of different micro-states, and between micro-states and larger countries," World Development, Elsevier, vol. 26(4), pages 639-656, April.
    9. Streeten, Paul, 1993. "The special problems of small countries," World Development, Elsevier, vol. 21(2), pages 197-202, February.
    10. Farrugia, Charles, 1993. "The special working environment of senior administrators in small states," World Development, Elsevier, vol. 21(2), pages 221-226, February.
    11. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    12. T. Scitovsky, 1960. "International Trade and Economic Integration as a Means of Over-Coming the Disadvantages of a Small Nation," International Economic Association Series, in: E. A. G. Robinson (ed.), Economic Consequences of the Size of Nations, chapter 0, pages 282-290, Palgrave Macmillan.
    13. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-1151, December.
    14. Paul Cashin & Norman Loayza, 1995. "Paradise Lost? Growth, Convergence, and Migration in the South Pacific," IMF Staff Papers, Palgrave Macmillan, vol. 42(3), pages 608-641, September.
    15. Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
    16. L. Tarshis, 1960. "The Size of the Economy and Its Relation to Stability and Steady Progress: I," International Economic Association Series, in: E. A. G. Robinson (ed.), Economic Consequences of the Size of Nations, chapter 0, pages 190-199, Palgrave Macmillan.
    17. Srinivasan, T N, 1986. "The Costs and Benefits of Being a Small, Remote, Island, Landlocked, or Ministate Economy," The World Bank Research Observer, World Bank, vol. 1(2), pages 205-218, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Easterly, William & Kraay, Aart, 2000. "Small States, Small Problems? Income, Growth, and Volatility in Small States," World Development, Elsevier, vol. 28(11), pages 2013-2027, November.
    2. International Monetary Fund, 2015. "Republic of Estonia: Selected Issues," IMF Staff Country Reports 2015/337, International Monetary Fund.
    3. Luca Brandi, 2004. "The Economy of Small States," Rivista di Politica Economica, SIPI Spa, vol. 94(6), pages 145-173, November-.
    4. Harvey W. Armstrong & Robert Read, 2002. "The phantom of liberty?: economic growth and the vulnerability of small states," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(4), pages 435-458.
    5. Patrick Guillaumont & Catherine Korachais & Julie Subervie, 2008. "Growth Oriented Macroeconomic Policies for Small Islands Economies: Lessons from Singapore," WIDER Working Paper Series RP2008-47, World Institute for Development Economic Research (UNU-WIDER).
    6. Armstrong, H. & De Kervenoael, R. J. & Li, X. & Read, R., 1998. "A comparison of the economic performance of different micro-states, and between micro-states and larger countries," World Development, Elsevier, vol. 26(4), pages 639-656, April.
    7. Armstrong, Harvey & Read, Robert, 1995. "Western European micro-states and EU autonomous regions: The advantages of size and sovereignty," World Development, Elsevier, vol. 23(7), pages 1229-1245, July.
    8. Jansen, Marion, 2004. "Income volatility in small and developing economies: export concentration matters," WTO Discussion Papers 3, World Trade Organization (WTO), Economic Research and Statistics Division.
    9. Tom Crowards, 2002. "Defining the category of 'small' states," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(2), pages 143-179.
    10. Vania Licio & Anna Maria Pinna, 2021. "Measuring insularity as a state of nature," Papers in Regional Science, Wiley Blackwell, vol. 100(4), pages 979-1004, August.
    11. Liou, F. M. & Ding, C. G., 2002. "Subgrouping Small States Based on Socioeconomic Characteristics," World Development, Elsevier, vol. 30(7), pages 1289-1306, July.
    12. Turnovsky, S., 2000. "Growth in an Open Economy: some Recent Developments," Papers 5, Warwick - Development Economics Research Centre.
    13. Henrik Hansen & Derek Headey, 2010. "The Short-Run Macroeconomic Impact of Foreign Aid to Small States: An Agnostic Time Series Analysis," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 877-896.
    14. Andros Kourtellos, 2002. "Modeling Parameter Heterogeneity in Cross Country Growth Regression Models," University of Cyprus Working Papers in Economics 0212, University of Cyprus Department of Economics.
    15. Celal Kucuker, 2003. "Türkiye Ýktisat Kongresi Büyüme Stratejileri Çalýþma Grubu," Working Papers 2003/5, Turkish Economic Association.
    16. Françoise RIVIERE & Michel DIMOU, 2017. "Modèles et stratégies de développement des petites économies insulaires. Revue de la littérature et nouveaux paradigmes," Working Paper 0bd96404-7210-4678-93d6-4, Agence française de développement.
    17. Boräng, Frida & Jagers, Sverker C. & Povitkina, Marina, 2016. "Political determinants of electricity provision in small island developing states," Energy Policy, Elsevier, vol. 98(C), pages 725-734.
    18. Patrick A. Imam, 2008. "Rapid Current Account Adjustments: Are Microstates Different?," IMF Working Papers 2008/233, International Monetary Fund.
    19. Jo Reynaerts & Jakob Vanschoonbeek, 2022. "The economics of state fragmentation: Assessing the economic impact of secession," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(1), pages 82-115, January.
    20. Horscroft, Virginia, 2014. "Public sectors in the pacific islands : are they'too big'and do they'crowd out'the private sector ?," Policy Research Working Paper Series 7102, The World Bank.

    More about this item

    Keywords

    Economic Theory & Research; Industrial Economics; International Trade and Trade Rules; Trade and Services; Economic Growth; Trade and Multilateral Issues;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2139. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.