Open and Nimble : Finding Stable Growth in Small Economies

Does economic size matter for economic development outcomes? If so are current policies adequately addressing the role of size in the development process? Using working age population as a proxy for country size, Open and Nimble, systematically analyzes what makes small economies unique. Small e...

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Main Authors:	Lederman, Daniel, Lesniak, Justin T.
Format:	Book
Language:	English en_US
Published:	Washington, DC: World Bank 2017
Subjects:	SMALL ECONOMIES ECONOMIC GROWTH SCALE ECONOMIES FOREIGN DIRECT INVESTMENT TRADE GOVERNANCE FISCAL TRENDS VOLATILITY NATURAL DISASTERS OPENNESS DIVERSIFICATION MIGRATION REMITTANCES LABOR FORCE
Online Access:	http://hdl.handle.net/10986/28544

id	okr-10986-28544
recordtype	oai_dc
spelling	okr-10986-285442021-04-23T14:04:48Z Open and Nimble : Finding Stable Growth in Small Economies Lederman, Daniel Lesniak, Justin T. SMALL ECONOMIES ECONOMIC GROWTH SCALE ECONOMIES FOREIGN DIRECT INVESTMENT TRADE GOVERNANCE FISCAL TRENDS VOLATILITY NATURAL DISASTERS OPENNESS DIVERSIFICATION MIGRATION REMITTANCES LABOR FORCE Does economic size matter for economic development outcomes? If so are current policies adequately addressing the role of size in the development process? Using working age population as a proxy for country size, Open and Nimble, systematically analyzes what makes small economies unique. Small economies are not necessarily prone to underdevelopment and in fact can achieve very high income levels. Small economies, however, do tend to be highly open to both international trade and foreign direct investment, have highly specialized export structures, and have large government expenditures relative to their Gross Domestic Product. The export structures of small economies are concentrated in a few products or services and in a small number of export destinations. In turn, this export concentration is associated with terms of trade volatility, which combined with high exposure to international trade, implies that small economies tend to face more volatility on average as external volatility permeates national economic life. Yet small economies tend to compensate for their export concentration by being nimble in the sense of being able to change their production and export structure relatively quickly over time. Moreover, limited territory plays a role in shaping how economies are affected by natural disasters, even when the probability of facing such disasters is not necessarily higher among small than among large economies. The combination of large governments with macroeconomic volatility seems to be associated with low national savings rates in small economies. This combination could be a challenge for long-term growth if productivity growth and foreign investment do not compensate for low domestic savings. The book finishes with some thoughts on how policy makers can respond to these issues through coordinated investments and regional integration efforts, as well as fiscal policy reforms aimed at both increasing public savings and conducting countercyclical fiscal policies. 2017-10-20T17:12:22Z 2017-10-20T17:12:22Z 2018 Book 978-1-4648-1042-8 http://hdl.handle.net/10986/28544 English en_US Directions in Development—Countries and Regions; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC: World Bank Publications & Research Publications & Research :: Publication Latin America & Caribbean Caribbean
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	SMALL ECONOMIES ECONOMIC GROWTH SCALE ECONOMIES FOREIGN DIRECT INVESTMENT TRADE GOVERNANCE FISCAL TRENDS VOLATILITY NATURAL DISASTERS OPENNESS DIVERSIFICATION MIGRATION REMITTANCES LABOR FORCE
spellingShingle	SMALL ECONOMIES ECONOMIC GROWTH SCALE ECONOMIES FOREIGN DIRECT INVESTMENT TRADE GOVERNANCE FISCAL TRENDS VOLATILITY NATURAL DISASTERS OPENNESS DIVERSIFICATION MIGRATION REMITTANCES LABOR FORCE Lederman, Daniel Lesniak, Justin T. Open and Nimble : Finding Stable Growth in Small Economies
geographic_facet	Latin America & Caribbean Caribbean
relation	Directions in Development—Countries and Regions;
description	Does economic size matter for economic development outcomes? If so are current policies adequately addressing the role of size in the development process? Using working age population as a proxy for country size, Open and Nimble, systematically analyzes what makes small economies unique. Small economies are not necessarily prone to underdevelopment and in fact can achieve very high income levels. Small economies, however, do tend to be highly open to both international trade and foreign direct investment, have highly specialized export structures, and have large government expenditures relative to their Gross Domestic Product. The export structures of small economies are concentrated in a few products or services and in a small number of export destinations. In turn, this export concentration is associated with terms of trade volatility, which combined with high exposure to international trade, implies that small economies tend to face more volatility on average as external volatility permeates national economic life. Yet small economies tend to compensate for their export concentration by being nimble in the sense of being able to change their production and export structure relatively quickly over time. Moreover, limited territory plays a role in shaping how economies are affected by natural disasters, even when the probability of facing such disasters is not necessarily higher among small than among large economies. The combination of large governments with macroeconomic volatility seems to be associated with low national savings rates in small economies. This combination could be a challenge for long-term growth if productivity growth and foreign investment do not compensate for low domestic savings. The book finishes with some thoughts on how policy makers can respond to these issues through coordinated investments and regional integration efforts, as well as fiscal policy reforms aimed at both increasing public savings and conducting countercyclical fiscal policies.
format	Book
author	Lederman, Daniel Lesniak, Justin T.
author_facet	Lederman, Daniel Lesniak, Justin T.
author_sort	Lederman, Daniel
title	Open and Nimble : Finding Stable Growth in Small Economies
title_short	Open and Nimble : Finding Stable Growth in Small Economies
title_full	Open and Nimble : Finding Stable Growth in Small Economies
title_fullStr	Open and Nimble : Finding Stable Growth in Small Economies
title_full_unstemmed	Open and Nimble : Finding Stable Growth in Small Economies
title_sort	open and nimble : finding stable growth in small economies
publisher	Washington, DC: World Bank
publishDate	2017
url	http://hdl.handle.net/10986/28544
_version_	1764467109717344256

Open and Nimble : Finding Stable Growth in Small Economies

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