Volltext: Very small countries: economic success against all odds

of VSC has been dictated by a rather narrow understanding of econo- mics and therefore resulted in a long list of disadvantages. Most studies briefly refer to a number of advantages104but do not analyze them ade- quately. An explanation for this fact is straightforward. There is a wide- ly held belief among economists that 
«the few advantages derived from small size identified in the micro-state literature are generally intangible and therefore impossible to quantify»(Armstrong and Read, 1995, p. 1230). While this statement contains, of course, a bit of an explana tion, it is nevertheless disappointing. A concentration on negative arguments clearly fails to explain why some VSC are overwhelmingly successful. In 135 
Economic characteristics of very small countries 104This is the reason why we abstain from giving more than a few references for argu- ments concerning the 
Advantages • greater social homogeneity, cohesion and closer coherence (Kohr, 1995) • less ethnic and linguistic fractionalization • greater flexibility • higher decision making efficiency • necessity of public outsourcing increases efficiency (Gantner and Eibl, 1999) • greater openness to change • large gains from international trade (Marcy, 1960; Scitovsky, 1960) • internationally «neglected» (ability to maintain niche policies) • possibility to create and protect narrow niche markets • law-making authority is very effective (economic benefits of sovereignty); legal diffe- rences between VSC and adjacent countries (Gantner and Eibl, 1999) • smaller «distance» between politics/administration and citizens • less congestion costs • less costs from agglomerations and conurbations


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