How Should Small Open Economies Respond to the Challenge of Globalization

How Should Small Open Economies Respond to the Challenge of Globalization

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Determining whether a country is small is not easy. First, one needs to decide how it will be determined. The “definition of a small open economy is one that is a price taker on world markets” (Wynne) but how this definition should be applied is a harder thing to do than it first appears. Should we focus on imports or exports? In terms of imports, theoretically, all countries all price takers because a country does not specialize in the things that it buys, thus it has no pricing power. Looking in exports is problematic as a country may have significant influence over one product, but even a nation have has a huge share and influence in one market such as Brazil with coffee, the nation will still not have monopolistic power on a global scale.
Other popular measures are using population size, and per capita GDP. Even once a measure has been decided upon there is still the question of what the decision point will be and how that point will be decided on. In one study the decision point was a population of a million or less, this cause Singapore to be excluded, as well as several other notable small countries including a couple that this paper will look at in greater detail. This same study analyzed how countries had progressed and several of the countries included in the first round were no longer considered small based on the criteria. Some studies used per capita GPD as the decision criteria the problem with this is that if a country was successful, then their GDP per capita is naturally going to be higher and will possibly exclude themselves from consideration. The problem, those countries are of particular interest as those nation were able to work within their constraints to be successful. Looking at those s...


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... Research Institute on Innovation and Technology.
Jaakko Kiander, 2004. "The Evolution of the Finnish Model in the 1990s: from Depression to High-tech Boom,"Discussion Papers 344, Government Institute for Economic Research Finland (VATT).
Kirby, Peadar. "Globalization, The Celtic Tiger And Social Outcomes: Is Ireland A Model Or A Mirage?." Globalizations 1.2 (2004): 205-222. Academic Search Complete. Web. 5 Dec. 2013.
Ocampo, Jose Antonio. "Small Economies in the Face of Globalisation." Third William G Demas Memorial Lecture. Caribbean Development Bank, Cayman Islands. 14 May 2002. Print. Lecture transcript.
World Bank. GDP per Capita (current $US). 22 Mar. 2012. Web. 4 Dec. 2013.
Wynne, Mark A. "How Have Small Open Economies Responded to the Challenge of Globalization?" Bank of Iceland Conference. Reykjavik, Iceland. 31 May 2007. Print. Lecture transcript.


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