Economic size, openness and export diversification: A statistical analysis

This paper tries to determine what implications does the size of a country have on the degree of openness to international transactions and on its degree of export concentration. The conclusion drawn is that the economic size of a nation have implications to the degree of its openness to international trade and to its degree of export concentration. Small economies are likely to be more open and more dependent on foreign trade than larger economies, due largely to its limited irreproducible natural resources and its small population. These factors also contribute to the high concentration of small countries exports of goods and services. Since it is more likely for small countries to become more highly open in the future, trade will become one of the major ingredients to growth. It is necessary that micro-states put the necessary mechanism in place to ensure there can be competitive in the world market. Due to these structural characteristics that small countries have been found to have openness and the degree of export concentration are included as two additional factors to help determine the economic size of a country.