The Economic Management of Small Island Developing Countries

• Author: Courtney Blackman
• Pages: 49-65

SMALL ISLAND DEVELOPING COUNTRIES

49

A hazard of high office in small island developing countries (IDCs)

is exposure to unsolicited and patronizing advice of visitors from

big countries, especially officials from international financial

institutions like the IMF and World Bank. Such advice usually

reflects the prevailing economic fad in the major industrial nations

that determine IMF/World Bank ideology. This year the panacea

is privatization; a little earlier it was positive real interest rates;

before that it was currency devaluation. Completing the cycle

during the Carter administration was the establishment of public

investment units.

A common feature of this advice is failure to take into account

the characteristics of small island states. Indeed, a visiting economist

once suggested to me that there were no fundamental differences

between the economies of Barbados and Brazil! Intuitively, there

must be something wrong with this approach. After all, a separate

discipline of paediatrics has evolved in medicine for the treatment

of the young; children are not regarded simply as small-scale

versions of adults.

My topic derives from a consulting assignment which I carried

out a few years ago for the Caribbean Community (CARICOM). I

was asked to prepare a position paper justifying special financial

aid from donor countries to island developing countries (IDCs). I

am not sure how convincing was my advocacy. For one thing, IDCs

3

THE ECONOMIC MANAGEMENT

OF SMALL ISLAND

DEVELOPING COUNTRIES

THE PRACTICE OF ECONOMIC MANAGEMENT

50

already receive a disproportionately high level of concessional aid.

In 1982 the unweighted average of concessional assistance to IDCs,

on a per capita basis, was US$428 (US$510 for small IDCs) as

compared with US$14 for all developing countries. Besides, small

IDCs are among the most successful countries in the world. For

example, the per capita income for Iceland in 1989 was

US$21,070, US$10,450 for Singapore, US$11,320 for The

Bahamas and US$6,350 for my native Barbados, placing them in

the World Bank category of high income countries.

Our purpose is to identify those characteristics that

differentiate small island states from major industrial states, and

to develop principles of economic management for small island

states as a group. Our first task will be to define the special features

of insularity, especially in respect of small states. Secondly, we shall

explore the economics of small IDCs. This exercise should enable

us to construct a decision model appropriate for the economic

management of IDCs, and to deduce principles of economic

management relevant to small IDC, such as those in the Caribbean.

Features of Small Island Developing Countries

Francois Doumenge, who prepared the UNCTAD paper,

Viability of Small Island States, provides the most erudite definition

of insularity:

True insularity only exists where (the emerged land area) is entirely

exposed to the influence of the sea. “True” islands are primarily

areas of land which have emerged at a sufficient distance from the

continent to escape direct influence, in terms of physical, as well as

human and economic factors.l

IDCs include independent members of the United Nations

as well as island territories, some of them colonies like St. Helena,

others self-governing dependencies like Montserrat, and others

like Martinique and San Andres, which are integral parts of a