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022 Article A012 en
022 Article A012 en
and Western Atlantic, one in the Indian tion of trade and the elimination or mar-
Benito Legarda ginalization of small operators. The con-
Ocean, and nine in the Pacific.
Consultant, International Monetary Fund
The politically independent island econ- tainer technologies developed for large,
omies varied tremendously in terms of ge- high-wage, continental countries with
There are a host of characteristics that help ography, demographics, and economic road-based transportation systems have
define small economies, and since a sizable size, and per capita income. They ranged in completely changed the nature of sea traffic
number of the so-called small economies land area from 25 to 28,446 square kilome- from an independent mode of transport to
are islands or archipelagoes, most of these ters, and had populations ranging from a mere extension of the land transportation
characteristics apply also to small island 8,000 to 958,000 in 1980. Their per capita system. Increasingly, large vessels carry
economies. The two accompanying articles GNP also varied widely, from $260 to al- much heavier cargoes to fewer ports with
by Barend de Vries and Vicente Galbis dis- most $24,000. The smallest, Nauru, had a container-handling equipment. Air traffic
cuss some of the conditions that hold in the GNP higher than 16 other independent is- compounds the plight of conventional
economies of small countries or territories. lands and the highest per capita GNP, shipping by drawing away passengers.
In brief, these conditions cover both the while the largest island country, the Solo- Modern air traffic also tends to burden
geographic and the economic aspects of mon Islands, was in sixth place in order of small economies, since long-range jumbo
smallness. Apart from smallness of popula- GNP and was eighteenth in order of per jets require fewer stops for refueling and
tion, land area, and gross national product, capita GNP. The nonindependent island larger, costlier, airport facilities.
small economies and small island econo- economies were equally diverse in their Small islands, because they have often
mies share other characteristics, including: economic characteristics, with their GNP been bypassed by the larger ships and by
• Geographic isolation; and per capita GNP affected by either eco- international air traffic, are at a disadvan-
• Narrow production bases, often one or nomic ties to major economies or by prox- tage. For archipelagic countries—a number
two primary products or industries, mainly imity to larger, more prosperous countries. of the independent island economies fall
producing for export; In assessing their economic situation and into this group—the effect is compounded
• Diseconomies of scale, translated the policy options available to them, the by domestic fragmentation: the outer is-
through factor indivisibilities into higher questions that must be posed are whether lands are, in turn, increasingly left out of
unit costs of infrastructure, investment, a small island economy faces a particular the economic mainstream. Official and un-
and production; set of problems that are different from official accounts tell of the decline and
• Restricted number of export markets other small economies or whether the ef- sometimes disappearance of cutter boat
and import suppliers; fects of the same conditions are especially services in the Pacific and of schooner traf-
• High vulnerability to natural hazards acute for the small island economies. Much fic in the Caribbean.
and global market fluctuations. of the literature skirts these issues, but These consequences have probably been
In 1980, there were 21 independent, where the questions are addressed, more accommodated more readily by the larger
small island economies, of which 17 were often than not the answer in each case is island economies. But they have serious
members of the Fund—small here referring that there are no significant differences. It implications for the small island economies
to countries of less than one million peo- is pointed out that smallness, remoteness, since they hinder the trading activities of
ple (but excluding Cyprus, Iceland, and dependence, peripherality, the decline in these countries, thus laying the basis for
Malta). The Fund members were situated self-reliance, insufficient economic diversi- treating them as a separate category.
in the Caribbean and Western Atlantic (An- fication, and weak bargaining positions vis- Another disadvantage of small islands is
tigua and Barbuda, the Bahamas, Barba- a-vis foreign investors and transport opera- remoteness, which has both geographic
dos, Dominica, Grenada, St. Lucia, and St. tors are all problems faced by small remote and economic aspects that contribute to the
Vincent), off Africa and in the Indian mainland countries and even by peripheral peculiar economic circumstances of these
Ocean (Cape Verde, the Comoros, Mal- regions with larger countries. countries. In its most obvious meaning, re-
dives, Mauritius, Sao Tome and Principe, moteness refers to geographic distance,
and Seychelles), and in the Pacific (Fiji, Sol- Why they are different with implications for transport costs and
omon Islands, Vanuatu, and Western Sa- However, some justification for putting delivery time, giving the advantage in the
moa). The nonmember countries, all in the small island developing countries in a spe- export trade to those countries that are lo-
Pacific, were Kiribati, Nauru, Tonga, and cial category emerges out of the conse- cated close to the rich markets of the more
Tuvalu. In addition, there were another 17 quences of the transportation revolution of developed countries. But there is another
island economies that were either associ- the last two decades or so. The rapid devel- aspect of remoteness that may enter the
ated with or dependent upon other econo- opment of the container and the cellular picture even when physical distance is not
mies. Seven of these were in the Caribbean container vessel has led to the centraliza- that great. For even if a small island country