Strengths and Weaknesses of Small Islands This paper describes the special disadvantages faced by small islands which arise mostly from: - small size, - insularity and peripherality.

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TOWARD AN OUTWARD-ORIENTED DEVELOPMENT STRATEGY
FOR SMALL STATES ISSUES, OPPORTUNITIES, AND
RESILIENCE BUILDING A REVIEW OF THE SMALL STATES
AGENDA SET OUT IN THE COMMONWEALTH/ WORLD BANK
JOINT TASK FORCE REPORT OF APRIL 2000 Prepared
by Lino Briguglio, Bishnodat Persaud, and
Richard Stern 2005 Small States
Forum September 24, 2005 Washington, DC
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GENESIS AND PURPOSE OF THE REPORT

• Review requested by the 2004 Small States
• Forum and the 2004 Commonwealth Finance
• Ministers meeting
• To determine whether the analysis contained in
  the 2000 Task Force report remains relevant
• Identify new issues and opportunities that have
  emerged
• The views expressed are those of the Authors

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KEY CHARACTERISTICS OF SMALL STATES

• The 2000 Report highlighted the following key
  characteristics of the small states
• Remoteness and insularity
• Susceptibility to natural disasters
• Limited institutional capacity
• Limited diversification
• Openness
• Key role of external capital
• Poverty

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DEVELOPMENTS SINCE 2000

• What has happened to small states since 2000?
• Average GDP growth has declined relative to
• comparators
• Income and export volatility remain high
• Service sector increasing in importance
• Share agriculture and merchandise exports
• declining
• Remittances and FDI remain critical
• Debt burden has increased

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EMERGING CHALLENGES

• Preference erosion is faster that anticipated
• Need to diversify into new activities
• Increasing environmental vulnerability
• Youth unemployment
• Security and crime
• HIV/AIDS
• Not all small states face the same challenges

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THE RESPONSE OF THE SMALL STATES

• Some have
• Embarked on economic reform programs
• Improved the investment climate
• Upgraded governance
• Expanded regional cooperation
• Implementing comprehensive responses to
• HIV/AIDS
• However in others
• Adjustment and fiscal reforms are largely
  absent
• Governance remains weak

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CONCLUSIONS AND RECOMMENDATIONS

• There is the need to shift emphasis away from
• Prolonging preferences and special concessions
• towards
• Designing and implementing outward-looking
• export based development strategies
  particularly in higher-end services
• and
• Building economic resilience to better
  withstand external shocks

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CONCLUSIONS AND RECOMMENDATIONS

• Creating and exploiting competitive advantage,
  particularly in the service sectors, will
  require
• Improving the investment climate
• Empowering and investing in the education,
• health and safety of human resources
• Increased regional cooperation
• Offsetting vulnerabilities by strengthening
• environment and other resilience mechanisms
• Increasing aid flows to support repositioning
• and a radical harmonization of donor
  efforts

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CONCLUSIONS AND RECOMMENDATIONS

• Improving the investment climate requires
• Securing property rights
• Simplifying tax regimes and administration
• Moving from import duties to less
  distortionary tax systems
• Provision of adequate infrastructure
• Assuring good governance, including increased
  outsourcing of government services
• Systematically leveraging the considerable stock
  of small state best-practices
• Mobilizing the diaspora

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CONCLUSIONS AND RECOMMENDATIONS

• Empowering and investing in human resource
  requires
• Investing in and upgrading the quality of
  education systems
• Maintaining the priority of the anti-crime
  agenda
• Aggressively combating HIV/AIDS
• Donor support will be critical-particularly
  from those benefiting from migration

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CONCLUSIONS AND RECOMMENDATIONS

• Intensify Regional Cooperation in such areas as
• Regulation (infrastructure and finance)
• Education
• Health
• Environmental and fisheries protection
• Airline and shipping procurement
• Crime prevention

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CONCLUSIONS AND RECOMMENDATIONS

• Offsetting Vulnerabilities
• Strengthen environmental institutions
• Intensify efforts to develop disaster insurance
• mechanisms
• Assign greater priority to disaster mitigation
• Assign lower priority for commodity insurance

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CONCLUSIONS AND RECOMMENDATIONS

• Role of the International Community
• Reverse decline in aid for small states that are
  
• implementing repositioning programs
• Implement radical steps to enhance aid
• coordination and to develop new aid
  products
• Simplify WTO accession procedures and
• strengthen representation for small states
• Increase engagement of regional organizations
• in small states forum
• Support the development of mechanisms to share
  knowledge/best practice among small states

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POINTS FOR DISCUSSION

• Is the analysis in the report correct?
• Which recommendations deserve more emphasis, and
  which ones are less important?
• Should there be further discussions of the
  review, for example at the country and regional
  levels?

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THANK YOU FOR YOUR ATTENTION