Very small states and island economies

Palm Island

Although superficially very different from regional economies, very small states and island economies share many of the characteristics of sub-national regions in that they are small, open economies in which policymakers have available only a very limited range of policy options. This makes them amenable to the same economic principles and analytical techniques as for regional economic analysis.

There are in excess of 120 sovereign small states and overseas territories in the world, many of which are also islands. A large number exhibit surprisingly good economic performance and growth rates and have adapted well to globalisation. A residual group continue to perform poorly.

My work with Robert Read (Lancaster University) on small states and islands has focused on five main areas. Firstly, we have analysed the determinants of differences between small states in their levels of economic performance and in their growth rates since the early 1990s. Secondly, the research has examined the role that 'islandness' plays in affecting the economic performance of small states. Paradoxically, insularity is more often associated with the better performing small states than with those experiencing development problems. Thirdly, the differences between sovereign small states and the overseas territories of metropolitan powers such as the UK and France have been analysed. Again paradoxical is the finding that, other things equal, sovereign small states tend to do less well than their dependent territory counterparts. Fourthly, the research has examined the policy options available to small states, and compared them with the options available for policymakers in sub-national regions. Finally, we have most recently researched the the role of the 2008 financial crisis on island states.

Modern growth theory stresses that geographical factors can have a major influence, partly through new economic geography mechanisms but also via more traditional variables such as tropical climate, landlockedness, agglomeration effects and geographical isolation from major global markets. Our research seeks to contribute to the important current 'institutions versus geography' economic growth debate, from the perspective of small states and island economies.

I have also worked with Dimitris Ballas (University of Sheffield) and Adreene Staines (Birmingham University) on the economic performance of small subnational islands in Greece and the UK.