Introduction [Small states and the pillars of economic resilience]

Abstract

Small developing states tend to be inherently prone to exogenous shocks over which they can exercise very little control, if any. In the main such proneness emanates from these states' structural trade openness and their very high dependence on a narrow range of exports. There are a number of small developing states that, in spite of their economic vulnerability, manage to generate a relatively high GDP per capita when compared with other developing countries. This can be ascribed to economic resilience building, which Briguglio et al. (2006) associate with policy-induced measures that enable a country to recover from or adjust to the negative impacts of adverse exogenous shocks and to benefit from positive shocks. Briguglio et al. argue that economic resilience depends upon appropriate policy interventions in four principal areas, namely macroeconomic stability, microeconomic market efficiency, good governance and social development.