ABSTRACT
As in other small economies, development in island states is constrained by the limits of small size. Well-known influences include: remoteness and isolation (resulting in high transport costs to markets); diseconomies of scale (because of small domestic markets); limited natural resources and a narrow production base, substantial trade deficits (because of dependency on metropolitan states); few local skills; vulnerability to external shocks and natural disasters; and a disproportionately high expenditure on administration and dependence on external institutions (such as banks and universities) for some key services. Moreover, political systems have sometimes been fragile, ecological structures are vulnerable and economies lack diversity. Small islands, a paucity of natural resources and remoteness, even within countries, have hampered the ability to compete in the global economy. Consequently island economies have traditionally specialised in a very narrow range of agricultural exports, such as copra and coffee. Export diversity is less than in any other world region. Set against this range of disadvantages, the comparative advantages of smallness and isolation are few, other than the retention of a degree of cultural integrity (Connell 1988b). Although the region does not suffer the absolute depths of poverty experienced in other parts of the developing world, it does have serious social and economic problems. Economic growth has been disappointing since independence, expanding populations have intensified pressure on lands and seas and political instability has increased.
