Being socioeconomically successful is a task in itself. However, being socioeconomically successful as a Small State seems to be a more difficult task. If you look at the gross domestic product per capita you might not find a correlation between a low GDP per capita and the smallness of a state. If you take a look at the GDP in absolute numbers you will find a correlation. GDP figures often cover up economic troubles which Small States experience. The problem consists in the higher vulnerability of Small States, in general and economic terms. Briguglio has pointed out how smallness hampers economic growth and/or makes it dependant on others.
To give some examples: Small Economies depend on imports from foreign markets because their smallness prohibits the production of any goods beyond agriculture necessities. To benefit from the human productivity rise Small (Island) States often import more than they can export. As a result of that foreign investors are needed to survive the trade deficit in the long run. Moreover, Economies of Scale is not possible and the fix costs are relatively high.
If the Small State is an island, remoteness makes the situation even more difficult. Large stocks are necessary and the per-unit transport costs are enormous. Especially Small Islands States are dependant on external markets and external financing if they want a living standard that is near to the average living standard of the world. The literature has mainly pointed out three strategies for tackling vulnerability as a Small Island State: The MIRAB Model, the SITE Model, the PROFIT Model. In particular Bertram and McElroy have put a lot of work into analysing and classifying these concepts. They mainly focussed on small island economies in the Caribic and in Oceania. That leads to the question how small states on dry land tackle their socioeconomic vulnerability. In the investigation of this question here, tha main interest lies on Europe because Europe includes Small States on the continental mainland. A look is taken into the vulnerability index of Briguglio from 1985. Antigua & Barbuda appear first as the most vulnerable state. The following ranks are dominated by caribic and oceanic islands. On rank 16 Malta shows up as the first European country. The next European nations to follow are Cyprus on rank 26 and then Portugal on rank 55.
Table of Contents
1. Introduction
2. My Cluster of European States
3. Classification of Economic Models
a) MIRAB Economy
b) SITE Model/ PROFIT Model
4. MIRAB and PROFIT in European Small States
a) Andorra
b) San Marino
c) Monaco
d) Liechtenstein
e) Malta
5. Conclusion
Research Objectives and Key Themes
This paper examines how European small states address their inherent socioeconomic vulnerability by analyzing whether the established economic models of MIRAB, SITE, and PROFIT are applicable to them. The study focuses on a cluster of five European small states from 1950 to 2016 to inventory their specific economic strategies.
- Analysis of socioeconomic vulnerability in Small States.
- Definition and classification of the MIRAB, SITE, and PROFIT economic models.
- Evaluation of economic strategies in Andorra, Monaco, San Marino, Liechtenstein, and Malta.
- Investigation of the role of tax policy, tourism, and jurisdictional advantages.
- Comparison of continental small states versus small island states.
Excerpt from the Book
b) SITE Model/ PROFIT Model
SITE stands for Small Island Tourist Economy. In Mc Elroy’s view a SITE exists when an island offers a relative high visitor expenditure per resident population, a high average daily visitor census and many hotel rooms per km². According to McElroy’s data that a SITE State tourists spend more than 1000$ per inhabitant in SITE states. The visitor census is over 100 per 1000 inhabitants and one can find more than 10 hotel rooms per km². These are approximated numbers identified by myself from Mc Elroy’s work for my European inventory later on.
So this model is also not about producing goods, it focuses on the service sector. The tourist’s spending provides jobs and revenues, which can be used for building infrastructure, whether basic or tourist infrastructure.
Summary of Chapters
1. Introduction: This chapter highlights the socioeconomic vulnerability of small states and introduces the MIRAB, SITE, and PROFIT models as potential mitigation strategies.
2. My Cluster of European States: The author defines the scope of small states for the study, establishing criteria based on land size rather than population to focus on a specific cluster of European nations.
3. Classification of Economic Models: This section details the theoretical framework, defining the MIRAB economy (Migration, Remittances, Aid, Bureaucracy) and the SITE/PROFIT models.
4. MIRAB and PROFIT in European Small States: The author applies the theoretical models to the individual cases of Andorra, San Marino, Monaco, Liechtenstein, and Malta to check for empirical alignment.
5. Conclusion: The paper summarizes the findings, noting that while the PROFIT model is widely applied across the studied states, the MIRAB model is primarily only identifiable in the case of Malta.
Keywords
Small States, Economic Vulnerability, MIRAB Model, SITE Model, PROFIT Model, Tourism, Tax Policy, Andorra, Monaco, San Marino, Liechtenstein, Malta, Economic Strategy, Jurisdictional Advantage, European Union
Frequently Asked Questions
What is the fundamental focus of this research paper?
The paper performs an inventory analysis to determine if three established economic models—MIRAB, SITE, and PROFIT—are utilized by a specific cluster of European small states.
What are the central thematic fields covered in this study?
The research covers economic vulnerability, the classification of small state economic strategies, and the comparative application of these strategies within European countries.
What is the primary research question?
The primary question is: Are the MIRAB, SITE, and PROFIT models used by European small states (Andorra, Monaco, San Marino, Liechtenstein, Malta)?
Which scientific methodology is employed?
The author uses an inventory analysis, comparing economic data and strategies against the theoretical parameters of the MIRAB, SITE, and PROFIT models.
What topics are discussed in the main body?
The main body defines the chosen small state cluster based on land size, details the theoretical models, and conducts a case-by-case analysis of five European states from 1950 to 2016.
How would you characterize this work through its keywords?
The work is characterized by terms such as Small States, Economic Vulnerability, MIRAB, SITE, PROFIT, and specific geographic focus areas like Andorra and Malta.
Why did the author define a small state as having less than 5,000 km²?
The author chose this definition to move beyond population metrics, as territory size is a more stable, independent variable than population numbers when analyzing sovereign economic strategies.
Does the MIRAB model fit the economic strategy of Liechtenstein?
No, the paper concludes that the MIRAB model is not in use in Liechtenstein because the country consistently maintains a trade surplus and provides development aid rather than receiving it.
How does the author categorize the SITE model in relation to other models?
The author merges the SITE and PROFIT models, considering the SITE model as a specific subcategory of the broader PROFIT strategy.
What is the primary conclusion regarding Malta's economic model?
The author concludes that Malta is the only state in the cluster that exhibits characteristics of the MIRAB model, although it is currently in a state of economic transition.
- Arbeit zitieren
- Nils Rieckmann (Autor:in), 2017, Micro States Economics. The MIRAB and SITE/PROFIT Model in European Small States, München, GRIN Verlag, https://www.hausarbeiten.de/document/376873
