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When comparative advantage is not enough: business costs in small remote economies

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  • ALAN WINTERS, L.
  • MARTINS, PEDRO M. G.

Abstract

This paper uses a newly collected dataset on business costs to investigate empirically whether small and remote economies are inherently uncompetitive. Although in theory these economies can overcome their small size by specialising and trading, this may not be enough to generate acceptable incomes because they face a combination of diseconomies of small scale and high transaction costs. We conclude that there are almost certainly some very small economies for which this is true. These economies are likely to become less attractive for commercial activities as globalization proceeds and their current trade preferences are eroded. The policy solution is not protection, however, but proactive policies from the international community.

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Bibliographic Info

Article provided by Cambridge University Press in its journal World Trade Review.

Volume (Year): 3 (2004)
Issue (Month): 03 (November)
Pages: 347-383

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Handle: RePEc:cup:wotrrv:v:3:y:2004:i:03:p:347-383_00

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Cited by:
  1. Pablo A. Acosta & Emmanuel K.K. Lartey & Federico S. Mandelman, 2007. "Remittances and the Dutch disease," Working Paper 2007-08, Federal Reserve Bank of Atlanta.
  2. World Bank, 2005. "The Cost of Doing Business in Africa : Evidence from the World Bank’s Investment Climate Data," World Bank Other Operational Studies 8769, The World Bank.
  3. Graeme Davis & Jyoti Rahman, 2006. "Perspectives on Australia's productivity prospects," Treasury Working Papers 2006-04, Treasury, Australian Government, revised Sep 2006.
  4. Congdon Fors, Heather, 2014. "Do island states have better institutions?," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 34-60.
  5. Guillaumont, Patrick, 2008. "An Economic Vulnerability Index: Its Design and Use for International Development Policy," Working Paper Series RP2008/99, World Institute for Development Economic Research (UNU-WIDER).
  6. Rob Stewart, 2006. "An economic survey of developing countries in the Pacific region," Economic Roundup, Treasury, Australian Government, issue 4, pages 91-115, November.
  7. Jyoti Rahman, 2005. "Comparing Australian and United States productivity," Economic Roundup, Treasury, Australian Government, issue 2, pages 27-45, June.
  8. Florent Venayre, 2012. "Protection du marché agricole et qualité sanitaire en Polynésie française," Post-Print halshs-00785749, HAL.
  9. Satish Chand, 2006. "Economic Growth in Forum Island Countries : Lessons of the Past Decade and Challenges and Opportunities Ahead," Development Economics Working Papers 21812, East Asian Bureau of Economic Research.
  10. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Working Papers id:2625, eSocialSciences.
  11. Florent Venayre, 2013. "Interventionnisme public et développement économique des collectivités d'outre-mer françaises du Pacifique Sud," Post-Print halshs-00918167, HAL.

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