Academic journal article Journal of Small Business Management

Saint Martin/Sint Maarten: A Case Study of the Effects of Culture on Economic Development

Academic journal article Journal of Small Business Management

Saint Martin/Sint Maarten: A Case Study of the Effects of Culture on Economic Development

Article excerpt


Government policy plays a strategic role in directing the economic development of a country. This international note compares the development efforts of two nations that coexist on the island of St. Martin--at 37 square miles, the smallest land mass in the world which is divided into two countries; nowhere else do two distinctly separate governments rule a smaller island.

Consequently, this study reflects what is almost a controlled experiment in economic development. A remote island, with limited natural resources, has been divided into two sectors, each influenced by its respective culture, for a substantial number of years. The difference in development can thus be partially attributed to the differences in culture, as well as differences in government and policy.

Each nation has its own official language, currency, predominant religion, and distinct culture, but most striking is the fact that differences in culture have resulted in contrasting policies on small business and consequently significantly different environments for entrepreneurship. Although both governments attempt to encourage economic development, the role of the state in small business formation in these two island economies differs greatly.

"American business sometimes thinks that government can best help business by not interfering with it; many believe laissez-faire is the best policy because they feel that it is dangerous to have the government in business. In France, the attitude is the opposite. There, business wants government intervention in the business sector, for the purpose of keeping potential danger out" (Dana 1988). In French Saint Martin, the state has succeeded in regulating to the extent of keeping danger out, but entrepreneurship as well; in Dutch Sint Maarten, by contrast, policymakers have created an environment supportive of entrepreneurship under the assumption that entrepreneurs emerge in favorable environmental circumstances. Indeed, they have.

Peterson (1988) has developed a typology to classify government policy into three categories: (1) laissez-faire-ist; (2) limited environmental approach; and (3) strategic interventionist approach. The "laissez-faire-ists" are content with natural processes within a market economy, with no assistance or interference from the government. Such an approach is pursued by those who view state intervention as an impediment to spontaneous private, entrepreneurial development. The limited environmental approach holds that government aid is legitimate so long as it is limited to ensuring a proper tax climate and positive stimulation of economic conditions. The strategic interventionist approach favors even greater government support such as deregulation, educational enhancement, and direct financial aid.

Dutch Sint Maarten has taken what Peterson describes as the limited-environmental policy approach, thereby creating a supportive environment(*) in which entrepreneurship can flourish. The result is a thriving business community characterized by sophisticated entrepreneurial activity.

In contrast, French Saint Martin, a subprefecture of Guadeloupe, which in turn is an overseas department of France, has an abundance of restrictions, regulations, and paperwork requirements (Peterson and Peterson 1981) as well as some regulated prices (Levi and Dexter 1983). While many of its citizens commute illegally to Dutch Sint Maarten for work, much of French Saint Martin has remained largely rural and agricultural.

Sint Maarten has a larger population than Saint Martin. In some instances a difference in population can be an explanatory variable for the propensity to entrepreneurship; in the case of Sint Maarten, however, it can be argued that an environment conducive to entrepreneurship appears to be attracting more people. The birth rate is higher in Saint Martin where the official religion does not condone contraception; yet demand for housing is growing faster in Sint Maarten, suggesting a higher rate of population growth. …

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