1887

Alternative Special and Differential Arrangements for Small Economies

image of Alternative Special and Differential Arrangements for Small Economies

Small states face particular problems in integrating into the world economy. These stem from diseconomies of scale and scope, but are often exacerbated by isolation and high transport costs. However, their efforts to obtain special and differential treatment analogous to (but not necessarily identical to) that received by least developed countries have been resisted by both developed and developing countries. This study considers alternative ways of achieving this goal. Although the special problems of small economies are receiving greater attention from the international community, problems still remain. By suggesting alternatives to traditional differential treatment, Dr Davenport’s study will generate much interest both among donors and with small states.

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Introduction

The difficulties faced by small states in fully integrating into the world trading system are well documented. They include the problems created by transport costs together with other costs associated with isolation and/or insularity and the absence of economies of scale and of scope associated with a small domestic market. However, suggestions that small states should receive a certain Special and Differential Treatment (SDT), modelled on, though not necessarily identical to, that enjoyed by the Least Developed Countries (LDCs), has not been broadly accepted, despite the obvious fact that, almost by definition, the small states are of little importance in world trade.

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