ABSTRACT
From an economic standpoint, different indicators can be used to measure country size. For the most part, however, population or national income is used as the yardstick of relative economic size.[ 1 ] In the theory of international trade, the concept of a “small” country is used in a specific sense. The theoretical models concerned with a country’s economic relations with the rest of the world offer two definitions. The simpler one classifies a country as small when it is confronted with given prices for internationally tradable goods and assets. By definition, the economic policies of a small country do not have repercussions on the rest of the world either through income or through prices. The theoretical model of a small open economy makes no reference to other characteristics such as geographical area, size of the population, and national income, although the price-taker status of the country may coincide with the more usual determinants of smallness such as national income.[ 2 ]
