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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.

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Policy Implications

A major finding of this study is that small states are likely to see their exports fall fairly substantially, and that for some of them the reduction may be critical. These countries need to adopt both short-term and long-term policies to mitigate and (eventually) counteract the effects of the crisis and increase their resilience to possible future shocks, which are not rare, as this crisis has once again shown. We review these policy implications in turn.

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