The politics and economics of small economies in the Americas: An empirical study and policy considerations

One challenge emerging in the Free Trade Area of the Americas negotiations that of integrating countries of significantly different economic size. While different levels of development has been pondered widely in the context of trade agreements, size disparity and the impact of small economic size on trade performance is a new subject of consideration. The main hypothesis explored in this dissertation is that small countries exhibit certain characteristics that challenge their ability to trade on the same basis as larger economies. Some of these are inherently related to their size; others are merely closely associated with small size.; Economic theory suggests that small countries benefit disproportionately from trade liberalization. Proposals from small countries in international trade fora suggest otherwise. This dissertation brings together two strands of literature---on special and differential treatment in international trade and on the economics of trade in small economies---to explore whether small economies merit special treatment in trade agreements.; Factors commonly associated with small size are examined: trade dependence; high costs; vulnerability; limited diversification; high volatility; limited human and institutional capacity; high reliance on trade taxes. The analysis suggests a threshold at which the constraints of small economic size cannot be compensated by its benefits. In the Americas this encompasses ten microstates, all of which are also vulnerable to diminishing trade preferences.; This small size constraint merits recognition in the international trading system. To adequately address this issue, policymakers and the international system must address both intrinsic and extrinsic constraints of small economic size.