Smallness of the Economy as a (Dis)advantage: The Evidence from Selected Interdependent Macroeconomic Data

Abstract

Small economies are usually classified by the size of their GDP. Among the small states, which can be determined by various criteria, there are many small economies. Smallness of the economy influences the vulnerability of the state, and if it is connected with the other potentially negative factors (land-locked or island position) or reliance on a few export products, it can create vulnerable economies. Concurrently, smallness of the economy can be an advantage, since it provides better conditions for faster economic growth and makes transformations of the economy easier. This article brings a quantitative comparative study of the small economies, classified by the size of their total GDP. Sets of macroeconomic data (foreign direct investment [FDI] net inflows in current US$ and GDP in current US$; external debt and GDP) were studied, for which the correlation between the FDI and GDP was calculated (for 40 smallest economies), as was the regression analysis between the FDI net inflows (independent variable) and the gross fixed capital formation (GFCF), as well as between the FDI net inflows and the growth of external debt for the 10 smallest economies between 1981 and 2014. The results were used to describe if there is a significant connection between FDI and external debt and if it can be mathematically modeled. All the data were taken from the web pages of the World Bank. The correlation analysis for FDI and GDP for the same years was also done. The countries that were studied had the smallest 40 economies in the world in 1981 (starting SMALLNESS OF THE ECONOMY AS A (DIS)ADVANTAGE 417

The impact of CEO characteristics on the international entrepreneurship of small island-based firms

“…Authors such as Kurecic, Luburic, and Kozina (2017) manifest that niche successes are related with companies willing to innovate, for which they require CEOs with the right academic background. Furthermore, executives with Business Administration, Finance, Accounting, or Economics academic backgrounds may consider an array of other strategic options before deciding on IE.…”

“…But, CEO's strategic flexibility can also strengthen the company's presence in its local market, making it unnecessary to look after more risky foreign projects. For example, strategic flexibility increases the success odds of niche products, which represent an opportunity to remain competitive in the local market (Kurecic et al, 2017).…”

“…In IBFs, top executives must be additionally tasked in order to be flexible in responding to internal and external shocks as a consequence of vulnerabilities related to island size (Baldacchino, 2019). Briguglio (1995) indicated insularity equips nations with distinct susceptibilities, such as the ability to develop and maintain limited human capital at par with other nations, deal with less geographic and product diversification, as well as face more limitations regarding resources and technology (Kurecic et al, 2017;Thompson et al, 2019). With respect to CEOs of IBFs, having a limited pool of qualified candidates may influence the ability of firms to capitalize on strategic opportunities such as IE in order to expand their boundaries.…”

Board composition and bank performance in a small island developing state: The case of Curacao

“…This study will further add to international literature and research on Small Island Developing States (SIDS). Most of the available information concerns Europe or the United States of America (USA), which are big economies, while island states represent the smallest economies in the world (Kurecic, Luburic, & Kozina, 2017). Furthermore, this study will help to create awareness in the financial sector on the potency of 'good governance' in a local context.…”