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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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Line-by-Line Analysis

If the use of variables relating to merchandise trade in the aggregate does not yield an acceptable set of criteria for determining which countries should be eligible for trade preferences, an alternative might be to give trade preferences line by line according to the exporting country's weight in world imports. To some extent this idea has already been put into practice. The EU's standard GSP scheme includes a number of provisions that limit the preferential treatment for individual countries.

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