Can small countries succeed in the global economy?

The American website "Modern Diplomacy" published a report by Yaroslav Lisovolik, in which he talked about current economic research that indicates that small economies are more successful and innovative compared to their large counterparts, where the leading small economies show high standards of living, growth and innovation.

The report stated that small economies constitute most of the world's countries, in more than 100 countries with a population of less than 10 million people, with the share of these countries in global GDP growing from 6.6% in 2000 to 7.4% in 2020.

The author added that wealth inequality is less pronounced in small countries than in large countries, and high scores of leading small economies are found in the United Nations Human Development Index, and small economies spend more on education and health care as a percentage of GDP, as well as small economies More homogeneous, a factor that plays an important role in economic success.

"Small economies have been shown to be more successful and innovative than their large counterparts! Current economic research suggests that this may be the case, with the leading small economies showing high standards of living, growth and innovation," the author said.

Singapore, Finland and Ireland

Among these studies is a book by “Shahid Yusuf” and “Kaoru Nabeshima” entitled “Some Small Countries Do It Better.” The book explores the experience of 3 small economies, the economies of Singapore, Finland and Ireland, and concludes that a large part of the success was derived from Invest in human capital development, particularly in education.

Another study by Credit Suisse entitled "Small Countries Success" points to a number of advances and advantages for small economies.

Jeffrey Frankel says in his paper, "What Can Small Countries Teach the World?"

The full range of superior economic policy practices demonstrated by small economies, including the socially oriented Scandinavian economic model in the Nordic countries, the economic success in attracting foreign direct investment in Ireland, the “unique development strategy” in Singapore, as well as Costa Rica in Central America and Mauritius In Africa, it has chosen to forgo large military expenditures while focusing on human capital development.

More importantly, small economies make up the majority of the world's countries, with more than 100 countries having a population of less than 10 million, with the share of these countries in global GDP growing from 6.6% in 2000 to 7.4% in 2020, compared to the share of The total world population of 4.4%.

The contribution of small economies to global GDP has increased among both developed and developing countries, and developing and developed countries have achieved a greater increase in their contribution in the past 20 years than their small counterparts in advanced economies.

As Jacob Frankl said, asking: “Why does one look to small countries when looking for good ideas for policies or institutions?” And he responds to his question by saying, “This is because history shows that big countries do not have all the answers.”

Of course, it is not wrong for an economy to be large, especially in light of the important role that the largest economies play in providing growth stimuli around the world.

However, it largely depends on how open these big heavy weights are, and that's where a lot of the problems lie these days.

In fact, the bulk of trade restrictions either stem from the world's largest economies or are directed against the leading powers on the international trading scene.

According to the WTO warning, in the past 10 years, the largest amount of trade restrictions have been directed against China, while initiatives in trade disputes and restrictions have been led by advanced economies such as the United States and the European Union.

Greater defense allotment

Large economies also tend to devote significantly more to defense than small economies, and hard power tends to be more important than "soft power" as a country gets larger.

This, in turn, comes at an economic cost that may affect the country's modernization path as well as the broader security context in regional and global contexts.

Another problem is that countries with large economies err in their economic development priorities, and given their size, the negative effects of the crisis and deflation can be felt throughout the regional sphere of the large economies concerned.

Smaller economies have much more flexibility (just like SMEs in the corporate world) to innovate, experiment, and build alliances around the world.

Singapore is a great example of this diversity on the international stage as this country leads the world not only in terms of trade alliances, but also the most modern version of these deals, the so-called digital economic alliances.