Download Archie II Micro

“Micro-states: Wealthy but vulnerable”
Dr Archie W. Simpson
Overview
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Definitions
Numbers and European micro-states
Characteristics
Vulnerabilities
Economic strategies
Offshore financial centres
Definitions
Sovereign state with a population of 1 million or less.
“The concept of micro-state is applied to states that
have one million inhabitants or less. This is the
usual method for defining micro-states”
(Anckar,2003, p.380).
- Armstrong and Read (2000; 2002; 2003)
- Plischke (1977)
- Mohamed (2002)
Numbers
The UN has 192 member states, 43 are micro-states.
Since 1989, the UN has admitted 33 new members
including micro-states and Switzerland.
The EU has 27 member states, 3 are micro-states.
The UN lists 15 non-self governing territories including
Falklands, Gibraltar, Guam, and Bermuda.
Other small territories include Faroe Islands,
Greenland, Isle of Man, Channel Islands,
and Northern Cyprus.
European micro-states
Andorra
Cyprus
Iceland
Liechtenstein
Luxembourg
Malta
Monaco
Montenegro
San Marino
Vatican City
Origins
Population (est. July 2008)
1278
1960
1944
1719
963
1964
1297
2006
301
1929
82,000
792,604
304,367
34,498
486,006
403,532
32,796
678,177
29,973
500-1000
Sources: CIA; BBC
Characteristics
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Small territories thus fewer natural resources.
Small populations.
Little political power or influence globally.
Militarily weak.
– Most have no armies whatsoever.
• Many have anachronistic political institutions.
• Most are former colonies except in Europe.
• UN members.
– Once decolonised, most states join UN.
Vulnerabilities
• Fewer natural resources due to less territory.
• Smaller population means smaller domestic market
and working population.
• External factors have larger impact.
• Highly open economy is more vulnerable to global
economic trends.
• Militarily weak.
• Lack diplomatic means globally.
– Rely on other states to represent them.
– UN membership required to extend diplomatic capabilities.
Economic strategies
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Need to specialise economically in 1-2 sectors.
Maximise resources including human resources.
Tourism.
Currency issues.
– Participation in currency of others
• Need to have access to wider markets.
• Diversify economy as much as possible.
• Less financial regulations to attract investment.
– Offshore financial centres.
Offshore financial centres
• No agreed international definition but,
– Provides financial services to non-residents
– High level of secrecy in banking
– Low tax levels
• OECD
– Financial Action Task Force (FATF)
– Annual list of states not co-operating; Liechtenstein and
Monaco usually listed.
– Dispute between Germany and Liechtenstein
Indicators of wealth?
Various facts and figures
Andorra:
10 million visitors each year buying many goods
Cyprus: Has a GDP per capita higher than 24 other European states
Iceland:IMF, CIA and World Bank list in top 10 GDP per capita
Liechtenstein: Richest Royal Family in Europe, worth £5 billion
Luxembourg: IMF lists as having highest GDP per capita in world
Malta: Has a GDP per capita higher than 19 other European states
Monaco:
estimates GDP of $900m per year
Montenegro:
Plans to build marina at cost of €650 million
San Marino:
Listed as ‘above average’ compared to Italy
Vatican City: Listed as 18th richest nation per capita in the world
Sources: IMF; CIA;
World Bank; and others.
Conclusions
The study of micro-states is as valid as the study of
any other kinds of states.
Micro-states have a number of interesting features and
economic strategies.
But micro-states are weak in geo-political terms and
have a range of inherent vulnerabilities.