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Small States face unique challenges compared to larger economies, which
necessitates targeted strategy for reforms.
• Small economies – in particular the island states -- face unique challenges
arising from their remoteness, small populations, lack of economic
diversification, high transportation and communication costs, and vulnerability to
natural disasters.
• Private-sector-led growth and a diversified economic base can be difficult for
small states to achieve.
• The narrow population base means a low demand for goods and services,
which limits domestic production and international investment targeted at the
local market.
• Production costs are generally high because of the lack of economies of scale.