Summary back to topA seminar on Small Economies
was held at the WTO on 21 October 2000. WTO members and
observers met to examine two basic questions: the nature
of the problems facing small economies and the possible
solutions to those problems.
Because addressing
the problems of small economies clearly requires a
comprehensive and coherent approach that extends beyond
the trade field, a number of other international
organizations outlined during the seminar their technical
assistance and capacity building programmes of special
interest to small and vulnerable economies.
The problems back to top
Members and
observers identified the following factors of
vulnerability for small economies:
(i) the limited
size of their domestic market, reducing the scope for
exploitation of economies of scale;
(ii) the limited
diversification of their export structure, both in
relation to the range of products and concentration on a
few markets;
(iii) vulnerability
to external and exogenous shocks, including natural
disasters, and a limited adjustment capacity to these
shocks;
(iv) remoteness
from markets and transport costs;
(v) limited human
resources and other factor endowments;
(vi) shortfalls in
institutional and administrative capacity.
The possible solutions back to top
Members and
observers discussed the following potential solutions:
More open
markets: while openness to trade may sometimes
exacerbate vulnerability, such openness also affords the
opportunity to develop global industries, beyond the
limited local market, and can also be a motor for growth
and development.
Internal reforms
and policy measures: there was a broad agreement that
internal reforms and policy measures, such as sound
macroeconomic management and the resolution of civil
conflicts, are critical in addressing the problems of the
small economies and in determining their participation in
international trade and the global economy.
New technologies:
small economies must take advantage of technological
developments.
Diversification
of exports: diversification of production and trade
is desirable but difficult to achieve as it often
requires a significant amount of investment and training.
Increased market
access: internal reforms and policy measures must be
complemented by international endeavours. For example,
exports of small economies often face high tariff rates
and non-tariff barriers in foreign markets. There is a
need for enhanced, secure and predictable market access
for exports of interest to small and vulnerable
economies.
Regional
agreements: regional cooperation among small
economies can help them overcome certain difficulties
through the pooling together of their resources,
including in international trade negotiations, at the
bilateral, regional and multilateral levels. However,
regional organizations cannot fully represent all the
interests of member states.
Small economies
also felt that they needed to take advantage of
transitional periods for implementation of WTO
commitments as well as technical assistance for capacity
building in relation to the aforementioned areas of
potential solutions to their problems.
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