The Global Financial Crisis and Trade Prospects in Small States

image of The Global Financial Crisis and Trade Prospects in Small States

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.



Possible Trade Implications for Small States

In order to see how these trade channels may affect small states, let us briefly describe the characteristics of their international trade. Their small market size and remote location tend to put small states, and small island states in particular, at a disadvantage in international trade. Due to the small domestic market, most of the firms are small and medium-sized enterprises (SMEs) with limited opportunities for economies of scale and investment in research and development.


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