Beautiful But Costly

Business Costs in Small Remote Economies

Paperback: £65.00
978-0-85092-810-5

Beautiful But Costly

Series Title: Economic Paper
Publication date: 1 January 2004
Size: 240mm x 165mm
ISBN: 978-0-85092-810-5
Pages: 194

Small countries have often argued that the interaction of factors such as diseconomies of small scale, huge costs for imported inputs, the cost of isolation and remoteness, and the costs of physical dispersion have hindered their ability to attract foreign investment in a globalised market. This publication is a study of the operating costs confronting the private sector in small economies, with the view to determine whether these act as a fundamental impediment to trade and investment. Is the private sector in these economies fundamentally disadvantaged in its preparations for globalisation because its costs are higher than in large ones? Further, are any of the detectable cost structure disadvantages the result of poor economic management and/or of fundamental structural characteristics? The outcome of the study offers a brief speculation on the type of policy interventions the international community could devise to assist those countries that face high costs structures by virtue of their inherent structural characteristics.



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Executive Summary  

1. Introduction  

2. The Conceptual Building Blocks
2.1 Economic Theory: When Comparative Advantage is Not Enough
2.2 The Approach
2.3 Defining Economic Size
2.4 Size and Location: A Fundamental Dilemma
2.5 About this Report  

3. The Business Cost Data
Annex 3.1  

4. The Costs of Smallness
4.1 Airfreight
4.2 Seafreight
4.3 Labour Market
4.4 Utilities
4.5 Passenger Air Travel Costs
4.6 Land
4.7 Conclusion
Annex 4.1
Annex 4.2  

5. Costs in Three Example Industries
5.1 The Input-Output Data
5.2 The Cost Disadvantage Factors
5.3 Defining Cost Inflation Factors and Income Penalties
5.4 Cost Inflation and Income Penalties: The Estimates
Annex 5.1. GTAP Definitions  

6. Smallness and Policy
6.1 Bank Interest Rates
6.2 Corporate Taxes
6.3 Import/Export Duties
6.4 General Indirect Taxes and Budget Deficits
6.5 Conclusion  

7. Conclusion  

References

Appendix 1. Survey Questionnaire
A. Basic Information
B. General Economic Data
C. Labour Market Data
D. Information on Utilities and Fuel
E.. Cost of Land
F. Government and Taxation
G. Transportation Costs
H. Banking and Financial Sectors