The Global Financial Crisis and Trade Prospects in Small States

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This is the first study to look at the trade effects on small states of the current global slowdown. Export industries in these countries have been affected at least as much as those of other developing countries. Given their reliance on trade, this means that the overall economic impact on small states may be greater than for other developing countries, all the more so for those countries exporting minerals and fuels, and ‘luxury’ goods and services, such as beef and tourism. The authors suggest a number of policy responses for governments of small states which may help to address the issues that arise.




The global financial system is currently experiencing a prolonged and deepening period of crisis. This global financial crisis began as a money market phenomenon rooted in the US housing market and has now spread to the real economy, both in the USA and abroad. The global credit crunch has compounded an already slowing global economy, marked by falling commodity prices and slowing demand for oil. The crisis has not spared developing countries, as shown inter alia by a recent study coordinated by the Overseas Development Institute (te Velde et al., 2009b).


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