Download Keynote Speech

International Conference on Small States and Economic Resilience
Valletta, Malta: 23 - 25 April 2007
MARKET ADJUSTMENT AND MARKET FAILURE IN SMALL STATES:
IMPLICATIONS FOR RESILIENCE BUILDING
Gordon Cordina
ABSTRACT
Please click here to view full paper
Economic resilience is the ability of an economy to withstand and rebound from the effects of adverse
shocks. This is dependent upon the efficiency with which resources are allocated and can be reallocated
following changes in exogenous conditions. Markets are a key factor in the allocation of resources, be
they capital, labour, goods and services.
The paper will argue that that the extent to which markets operate efficiently is an important determinant
of economic resilience. On the other hand, it is to be considered that instances of market failure are more
common in small economies.
The paper therefore argues that small economies have a greater need for policy measures aimed at
generating market responses to external shocks.
Towards this end, the paper proposes a number of policy measures aimed at promoting market
efficiency, and, in cases of market failure, at devising appropriate instruments and mechanisms conducive
towards rendering the economy more responsive to external shocks, thereby building resilience.
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