By E.A.G. Robinson (ed)
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Extra info for Economic Consequences of the Size of Nations: Proceedings of a Conference held by the International Economic Association
The common market movement in Europe indicates quite clearly that when some fairly high levels of economic growth have JI The Problem been passed, the small nation can pioneer new institutional arrangements, now in the sphere of international relations. The main premise of this paper is that the proper framework of social institutions, capable of continuous and relatively painless adjustment and, in fact, social invention, is an indispensable prerequisite for modern economic growth. Given this premise, the distinctive advantage of small nations lies in this determinant of economic growth - not in technology of production.
1 See my ' International Differences in Capital Formation and Financing', Capital Formation and Economic Growth, edited by Moses Abramovitz, UniversitiesNational Bureau Committee for Economic Research (Princeton University Press 1956), particularly Table 11-4, p. 71. 23 The Problem IV. EFFECTS OF SIZE WHERE FOREIGN TRADE IS IMPOSSIBLE While foreign trade permits concentration of a small country's activity in the economically advantageous sectors, not all goods needed for domestic use can be imported ; nor can a country's economic growth be securely built upon exports to a few countries of destination.
Advantages in natural resources never last for too long given continuous changes in technology and its extension to other parts of the world. To put it differently : every small nation has some advantage in natural resources - whether it be location, coastline, minerals, forests, etc. But some show a capacity to build on it, if only as a starting-point, toward a process of sustained economic growth and others do not. The crucial variables are elsewhere, and they must be sought in the nation's social and economic institutions.