Working Smart and Small

The Role of Knowledge-based and Service Industries in Growth Strategies for Small States

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Small states face serious challenges for development due to their size, remoteness and vulnerability. In recent years, the prospects for small states have deteriorated further due to preference erosion and the emergence of larger competitors such as India and China. Working Smart and Small suggests how small states can reposition themselves in the global economy and move into knowledge-based and service industries.

Part I provides an overview of general factors stimulating or constraining the development of services sector and trade in services. It also identifies key trends and provides analysis.

Part II gives six case study examples of how some small states have promoted knowledge-based and service industries in their economies. The small states studied, from different regions and income groups, are Botswana, Mauritius, St. Lucia, Singapore, United Arab Emirates and Vanuatu. The studies cover the performance and supporting factors in five promising service sectors: the financial sector, information and communication technologies, education, professional services and tourism.

Part III considers the policy implications.

This book will be of particular interest to economic policy-makers and researchers working on issues of concern to small states.



Opportunities for Small States

Despite the obvious disadvantages, some studies suggest reasons for optimism for small states. For example, Spolaore (2004) argues that previous studies like Winters and Martins (2005), might be overestimating the costs of being small. He observes that high costs associated with small size may in reality be due to physical isolation or remoteness and/or other political characteristics rather than actual size.1 This view is supported by Armstrong et al. (1998) who do not find evidence that growth is determined by population size once initial income and regional effects are taken into account.


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