Small Developing Countries and Global Markets: Competing in the Big League

Small Developing Countries and Global Markets: Competing in the Big League

Small Developing Countries and Global Markets: Competing in the Big League

Small Developing Countries and Global Markets: Competing in the Big League

Synopsis

This book discusses the advantages and pitfalls of different strategies for small developing economies to become more integrated into the world economy. It will help those engaged in formulating coherent and effective policy responses.

Excerpt

Over the past decade, policy-makers have been confronted with the trends of globalization and regionalization. Economic activity across national borders has been increasing rapidly, creating new opportunities, but also leading to fears of exclusion or marginalization. At the same time there has been a new wave of regionalism, involving industrial as well as developing countries. Developing economies are strongly encouraged to embrace 'openness'—in other words, to dismantle their barriers to trade and investment. Openness is presented as the key to participation and integration in the world economy, which will stimulate economic growth.

However, integration into the world economy implies various kinds of adjustment, to new ideas, new goods and new methods of production. Adjustment can be costly and risky, because some industries may be forced to close down before new opportunities have materialized. There are not only economic adjustment costs. There is also a wider educational and cultural adaptation process when a country becomes more integrated into the world economy. While there are costs and risks for all countries, small developing economies face special problems because they are more vulnerable than other countries. Small developing nations are often not able to participate effectively in the multilateral trading system. Many have tried some form of regional integration, but, so far, these efforts have been largely unsuccessful. Many also continue to rely on special arrangements or privileges granted by the industrial countries, but the advantages of these arrangements are dwindling. Moreover, some of these arrangements are increasingly being challenged. For all these reasons, small developing economies need to reflect carefully on their strategy to reposition themselves in the new world economic context.

This book is addressed firstly to economic policy-makers in smaller developing countries who are confronted with the issues of globalization and regionalization and who must develop a coherent policy response.

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