{
  "title": "Make the Most of What You’ve Got: Small States in the Spotlight",
  "publication": "IMF Blog, April 1, 2013",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2013/04/01/make-the-most-of-what-youve-got-small-states-in-the-spotlight",
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  "summary": "More than a fifth of IMF members are countries with populations of under 1.5 million.",
  "sections": [
    {
      "heading": "Small can be complicated",
      "content": "- More than a fifth of IMF members are countries with populations of under 1.5 million.\n- Three out of four small states are islands or widely dispersed multi-island states; others are landlocked, and some are located far from major markets.\n- Microstates: populations below 200,000 and face fairly unique and at times more difficult economic circumstances.\n- Examples:\n  - Tuvalu: land area of 10 square miles, roughly one-seventh the size of Washington, D.C., which makes it difficult to produce agricultural goods.\n  - Kiribati: population of 100,000 people is spread over 3.5 million square kilometers of ocean—an area about the size of the Indian subcontinent."
    },
    {
      "heading": "Why size matters — intrinsic characteristics and development challenges",
      "content": "- Higher fixed and variable costs of providing public goods, with little scope to exploit economies of scale.\n- Private sector: higher costs have led to concentrated markets with less competition.\n- Very high shares of imports and exports in most small states help overcome weak competition and invigorate growth, but:\n  - High degree of openness heavily exposes them to external shocks in global markets.\n- Limited scope to diversify into a wide range of activities, increasing vulnerability to shocks.\n- Domestic financial markets tend to be shallow.\n- Less favorable access to global capital as investors often perceive them to be more risky.\n- Exposure to natural disasters and climate change:\n  - Micro states in the Caribbean and the Pacific suffer annual costs equivalent to some 3 to 5 percent of GDP because of natural disasters.\n  - United Nations Intergovernmental Panel on Climate Change expects Kiribati to be the first country to see its entire territory disappear underwater as a result of global climate change."
    },
    {
      "heading": "Make the most of what you’ve got — outcomes and strategies",
      "content": "- Long-term economic performance: generally good; per capita income levels and social indicators broadly match those of larger peers.\n- Success factors observed in some small states:\n  - Higher levels of openness.\n  - Improved education.\n  - Financial development.\n- Key strategy: pursue policies that exploit advantages and offset disadvantages.\n- Regional integration and cooperation as an offset to size disadvantage:\n  - Example: Eastern Caribbean Currency Union’s Regional Government Securities Market aims to integrate national securities markets into a single regional market to exploit economies of scale in financial markets.\n- Despite potential, since the late 1990s most small states have experienced slower and more volatile growth than larger peers and, with higher public spending, a number now face high debt burdens."
    },
    {
      "heading": "IMF engagement, tools, and policy recommendations",
      "content": "- Increased IMF engagement driven by internal and Executive Board interest:\n  - Informal working group on economic issues in small states.\n  - Internal small islands group to facilitate sharing of insights and lessons learned by staff working on small states.\n- Financing instruments and emergency assistance:\n  - Use of IMF financing instruments including the Rapid Credit Facility, a type of emergency assistance, to weather natural disasters and other external shocks.\n- Capacity building and technical assistance:\n  - Delivery of technical assistance and training, particularly through regional technical centers, plays a vital role in building small states’ capacities.\n  - Staff exchanges involving national governments, regional entities, the IMF, and other international organizations may help strengthen institutions.\n- Collaboration with other international institutions and development partners to meet small states’ needs and learn from their experiences.\n- Planned IMF actions:\n  - Pursue analytical work on issues affecting small states.\n  - Maintain an active dialogue with country and regional officials.\n  - Continue to help build capacity.\n  - Over time, these efforts should help reduce small states’ vulnerability and increase their resilience.\n\nSource: Make the Most of What You’ve Got: Small States in the Spotlight — Min Zhu, April 1, 2013.\n\n---\n\n Content in this bundle\n\n- 1. Small States: Selected Indicators\n  - 1. Small States: Selected Indicators (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1. Small States: Selected Indicators (PDF){rel=\"external\" type=\"application/pdf\"}\n- Executive Summary\n  - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}\n- Caribbean Small States: Challenges of High Debt and Low Growth; IMF Policy Paper; February 20, 2013\n  - Caribbean Small States: Challenges of High Debt and Low Growth; IMF Policy Paper; February 20, 2013 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Caribbean Small States: Challenges of High Debt and Low Growth; IMF Policy Paper; February 20, 2013 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/blogs/articles/2013/04/01/make-the-most-of-what-youve-got-small-states-in-the-spotlight"
    }
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    "Authors: Min Zhu",
    "Published: April 1, 2013",
    "More than a fifth of IMF members are countries with populations of under 1.5 million.",
    "Three out of four small states are islands or widely dispersed multi-island states; others are landlocked, and some are located far from major markets.",
    "Microstates: populations below 200,000 and face fairly unique and at times more difficult economic circumstances.",
    "Examples:",
    "Higher fixed and variable costs of providing public goods, with little scope to exploit economies of scale.",
    "Private sector: higher costs have led to concentrated markets with less competition.",
    "Very high shares of imports and exports in most small states help overcome weak competition and invigorate growth, but:",
    "Limited scope to diversify into a wide range of activities, increasing vulnerability to shocks.",
    "Domestic financial markets tend to be shallow.",
    "Less favorable access to global capital as investors often perceive them to be more risky.",
    "Exposure to natural disasters and climate change:",
    "Long-term economic performance: generally good; per capita income levels and social indicators broadly match those of larger peers.",
    "Success factors observed in some small states:",
    "Key strategy: pursue policies that exploit advantages and offset disadvantages.",
    "Regional integration and cooperation as an offset to size disadvantage:",
    "Despite potential, since the late 1990s most small states have experienced slower and more volatile growth than larger peers and, with higher public spending, a number now face high debt burdens.",
    "Increased IMF engagement driven by internal and Executive Board interest:",
    "Financing instruments and emergency assistance:",
    "Capacity building and technical assistance:",
    "Collaboration with other international institutions and development partners to meet small states’ needs and learn from their experiences.",
    "Planned IMF actions:",
    "**1. Small States: Selected Indicators**",
    "**Executive Summary**",
    "**Caribbean Small States: Challenges of High Debt and Low Growth; IMF Policy Paper; February 20, 2013**"
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