The investment development path theory and small states

Abstract

Small states, classified as countries with population barely exceeding 1.5 m, encounter special development challenges. Although they share common characteristics of small population and size of land area, they also differ along other characteristics such as geography, remoteness, and dispersion. These have combined to depict them as different from large states and hence could differ from large states regarding responses to macroeconomic indicators such as foreign direct investment. Thus, this paper investigated the stages of Small states within the investment development path (IDP) framework. As a collective, developing Small states depart from the theory of the IDP. As individual Small states, some of the countries also showed stages that are inconsistent with the theory and empirical evidence. Small states need to be studied as a collective and as individual countries.