The vulnerability and resilience of small island developing states in the context of globalization

In spite of the wide diversity in the economic performance of small island developing states (SIDS), the apparent prosperity of several SIDS has entailed a global misrepresentation of the economic situation of these countries. While their vulnerability to natural disasters is not denied, the general risk of economic marginalization that many SIDS face in the context of globalization may not have received sufficient attention. The paper attempts to highlight what matters most in the consideration of the economic vulnerability of SIDS and in the debate to prevent their marginalization. It examines the main types of external shocks to which SIDS are vulnerable, and discusses the economic handicaps that are fundamental causes of this vulnerability. Economic specialization (with the predominance of international trade in services) is then a central notion in the analysis of island vulnerability: a better specialization, which may involve diversification and always implies greater international competitiveness, can reduce the exposure or vulnerability of SIDS to external shocks, and induce greater economic stability in these countries. Hence the importance of developing policies to circumvent the specific handicaps of islands and facilitate the realization of new trading opportunities through an emulative use of globalization forces.