The Trade Performance of Small States

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This paper analyses the trends in the relative significance of small states in world trade, and looks at the reasons for their marginalisation. It advocates that dependence on primary products and increasing globalisation explain much of the trend in the declining significance of small states, but that there are four other key factors: the structure of the export trade; the unfavourable geographical positions of many small states; their lack of financial resources; the global trade regime under the WTO.



Why is Marginalisation of Small States a Cause for Concern?

Marginalisation occurs when the relative importance of a particular country or group of countries diminishes in world exports or trade. This does not necessarily mean that declining share is always associated with an absolute fall in export volume. If world exports are expanding rapidly, countries registering modest rates of growth will see their relative share of world trade shrinking.


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