Baha mas; and finally, that the Bahamas are able to solve more issues auto nomously than Liechtenstein or San Marino. We are not aware of such an international index of effective autonomy. Therefore, we refrain from distinguishing between different levels of effective autonomy of countries, which are fully recognized internationally. Besides the fully sovereign VSC there are a lot of territories or re - gions of similar size which are part of larger countries but exhibit various degrees of autonomy, from almost full sovereignty to constrained levels of autonomy like the 
Länderor Kantonein Germany and Switzer land, respectively. Examples of regions within the EU territory with signi - ficant economic autonomy but not full sovereignty would be the Canary Islands (Spain), the Isle of Man (U.K.), which even has its own curren- cy, though at par with the British Pound Sterling, and the Channel Islands (Jersey and Guernsey; U.K.). EU regions with a little less econo- mic autonomy would be, for instance, Gibraltar (U.K.), the Azores (Portugal), the Faroe Islands (Denmark) or South Tyrol 
(Italy). 5.3.1 Theoretical expectations What should one expect, theoretically, when autonomous regions and VSC are compared? On the one hand, we conjecture that integra tion in the larger economic structure of the country to which the autonomous region belongs (equivalent to a very high degree of openness) reduces the disadvantages of small size, especially all the disadvantages asso ciated with a small home market. If, however, the degree of trade integra tion does not differ qualitatively between VSC and their adjacent countries and autonomous regions and the country they belong to, this argument would be of limited validity. At least for the European high-income VSC, we suppose that the difference should be minor. On the other hand, the limited sovereignty of autonomous regions might constrain them in pursuing strategies to occupy economic niches or to implement policies to promote growth (Armstrong and Read, 1995). We are especially interested in this latter argument in order to ob- tain a more clear-cut picture of the degree of sovereignty or autonomy necessary as a prerequisite for high levels of 
welfare.161 
VSC versus autonomous regions of larger countries