Despite changes in the pace and extent of globalisation, it is clear that national territories still have importance in organizing economic and business activities. Small states continue to find that the constraints and opportunities that they have historically enjoyed will be modified by current changes but will not be removed altogether:
"Asymmetry of geographic scope is emerging as economic units (markets) expand in space well beyond the limits of political units (national Territories). More important is the emerging asymmetry in mode of organisation as policies remain geographically grounded in the modern territorially based sovereign state system while major sectors of the world economy are organized in terms of post-modern electronic networks. Geographic space is losing meaning as a basis for the organisation of markets." (Kobrin, Stephen J., "The Architecture of Globalisation: State Sovereignty in a Networked Global Economy," in John H. Dunning, ed., Governments, Globalisation, and International Business (Oxford: Oxford University Press, 1999), pp.146-72.)
Defining the nature of small states can be a complex issue as there are numerous dimensions of size and power that may be considered, not just geographical size or population. For example, a country such as Sudan is very large in terms of territory but with a low population and population density and a paucity of natural resources. It is a weak state, therefore, as well as being small in some important ways. Does this qualify it to be considered a small state? To try to resolve these kinds of issues, definitions have been attempted by a number of authorities. These often focus on the difficulties that small states may face. Characteristics that are often considered included openness to external shocks and environmental changes, the constraints imposed by specialisation and lack of a full set of complementary resources together with susceptibility to natural disasters. Small states that are not able to manage economic success are particularly vulnerable to heavy indebtedness and may be tempted into schemes that may be used for money laundering and corruption. Additional problems include limited access to external financial capital, income volatility and poverty.
Owing to constraints on inputs and resources, small states occasionally become involved in various forms of cross-border economic co-operation with bordering nations. The small state generally looks to provide managerial expertise, intellectual capital or financial capital, while neighbours provide natural resources or a comparatively low-cost labour force. Such arrangements are often termed 'growth triangles,' since they frequently involve three countries. However, this need not always be the case. Singapore has joined with provinces of Malaysia and Indonesia to unite Singaporean technology and expertise with Malaysian resources and Indonesian labour, for example. While these forms of co-operation seem to offer excellent mechanisms for bringing resources together, they can suffer from the perceived and actual inequity in distribution of rewards and the exacerbation of existing national political tensions. For example, the presence Indonesian migrant workers in Malaysian has been at the centre of tensions between those two countries, while resentment of Singapore is also a genuine phenomenon which has affected that country's ability to secure the full reward for its efforts. Growth triangles are related to regional organisations and different levels of economic integration. These tend to benefit from a closer alignment of intentions but suffer from unwieldy bureaucracy and lack of effective synergies. For example, the Gulf Co-operation Council (GCC), of which the UAE is a member, has been hampered by lack of effective leadership and unwillingness by political leaders to engage themselves with substantive issues.
Clearly, not all small states have suffered from these problems or, at least, they have managed to counteract them through efficient management of other resources. The states selected in this study are not amongst the very smallest states of the world, such as the islands of Micronesia or the Caribbean but they do nevertheless suffer from the constraints discussed above to some extent. The United Arab Emirates and Brunei are geographically small states that have achieved economic stability through access to hydrocarbon reserves; Singapore has generally sought success through its role as an entrep?t and, in more recent years, as possessor of advanced resources and skills; Switzerland and Ireland have used network connections and specialist industries in different ways. This research seeks to identify common patterns among the sample of small states and, hence, recommendations for enhancing the competitiveness of other states in similar situations.
Small States in This Study
Five states were selected for examination in this study. These were the United Arab Emirates, Switzerland, Ireland, Brunei and Singapore. The selection was made on the basis of a variety of criteria, including geographical and historical diversity and trajectory to development. To maximize the presence of data, well-developed states were selected, although full coverage was by no means assured as it happened. Since it was desired to examine the issue of competitiveness, it was decided to consider only states that offered some degree of this quality to some identifiable degree. However, variety of experience was clearly important in this respect. Hence, both island and land-locked states were included; those which had been well-established for centuries and those which were comparatively modern in creation; those with a high and those with a low population-density; those with a high level of natural resources and those without. This led to the selection of Singapore as a comparatively modern island state with a background as a trading post and limited physical size; Brunei with a low level of population but a trading past and the presence of hydrocarbons; the United Arab Emirates has similar characteristics but a different relationship to the major regional powers, especially in terms of its proximity to the centre of the religion that spurred a great deal of the creation of the trading system in which it has operated. Switzerland and Ireland are European states with a slightly peripheral role through geography but with differing experiences with respect to their varying neighbours.
