1st Edition

Development and Stabilization in Small Open Economies Theories and Evidence from Caribbean Experience

By DeLisle Worrell Copyright 2023
    440 Pages 29 B/W Illustrations
    by Routledge

    440 Pages 29 B/W Illustrations
    by Routledge

    This book analyses and explains the nature of the economies of small countries and territories. It includes an assessment of material prosperity in 41 small open economies worldwide, with case studies focusing on the Caribbean and Central America, with a review of the development of their economies in recent decades. The volume recommends a suite of economic policy tools for the management of these economies, demonstrating how these may best be employed in economies that live and breathe through international commerce. Among observations of interest is the fact that the devaluation of the local currency of a small nation makes the country worse off; even a currency that maintains its value is little more than a trophy, of little value if it is not readily convertible into US dollars. Also, that while government policies affect international competitiveness and a small country's growth prospects, more important is how governments use additional resources to improve the quality of health and educational services. Moreover, economic windfalls such as the discovery of mineral resources seldom bring prosperity commensurate with their economic value, and never in the short run.

    The volume will offer invaluable information and analysis to researchers and policy makers investigating small open economies.


    1 Introduction;

    Section A. Country, Regional and Comparative Studies: The Varieties of Economic Performance in SOEs

    2 Human Development and Economic Stabilization: Comparative SOE Experiences; 3 Selected Country Experiences; 4 The Sources of Foreign Exchange in Caribbean and Central American Countries; 5 Economic Integration in the Caribbean

    Section B. Monetary, Fiscal, Financial and Exchange Rate Policy in the Small Open Economy

    6 A Policy Model for Stabilization and Growth in the Small Open Economy (SOE); 7 Targeting the Exchange Rate using Fiscal Policy to Adjust Aggregate Expenditure; 8 International Competitiveness with an Exchange Rate Anchor; 9 The Uses of Monetary Policy in SOEs; 10 Finance, Development and Stability in the Small Open Economy; 11 Currency Unions and Dollarization: the Obsolescence of the Currencies of SOEs

    Section C: Tools and Practical Considerations for the Economic Policy Maker

    12 A Model and Framework for Economic Policy Design and Implementation in SOEs; 13 Size Matters: Small Economies need Different Strategies for Stable Economic Development; 14 What’s Wrong with Economics? The Limits of Economic Theory and Practice

    Section D. Political Economy and Institutions

    15 The Small Open Economy: Central Banking for the Real World; 16 Sovereignty, History, Geography, Technology and the Degrees of Freedom for Economic Policy; 17 Measuring Material Well-being ; 18 Globalization is not a Choice; it is a Statement about our World; 19 Practical Guidance for Policy Makers in Small Open Economies



    DeLisle Worrell is a member of the Bermuda Financial Policy Council, the Bretton Woods Committee, Washington DC, and the College of Central Bankers, Federal Reserve Bank of Philadelphia. He was Governor of the Central Bank of Barbados 2009–17. Dr Worrell founded the Bank's Research Department in 1973, and he subsequently oversaw the establishment of its Banking Supervision and Information Technology Departments. Dr Worrell spent a decade on the staff of the International Monetary Fund from 1997, and he has had fellowships at Princeton and Yale Universities, the Smithsonian Institution and the Peterson Institute (both in Washington, DC), and the US Federal Reserve. Dr Worrell is the author of Small Island Economies: Structure and Performance in the English-speaking Caribbean Since 1970, and author or editor of several other economic titles and numerous articles on the open economy. His Ph D in Economics is from McGill University, Montreal.

    'I would like to start by congratulating DeLisle Worrell for authoring such an interesting and inisghtful book.'

    - Professor Lino Brigugilio, Islands and Small States Institute, University of Malta


    'In the Caribbean there is no discernable effort to implement ideas similar to Worrell’s. Even so, in this path-breaking study he has successfully established that there is a path by which small societies can experience economic development.'

    - Professor Jay Mandle, Colgate University, Emeritus


    "This book makes a valuable contribution to the analysis of the economic problems facing small developing states, particularly in the Caribbean."

    - Bert van Selm, Finance and Development, June 2023.


    “Worrell’s Development Stabilization in Small Open Economies is highly recommended not only for Caribbeanists, but also those interested in challenges faced by small open economies, students, and policymakers—including those in multinational organizations.”

    - Scott MacDonald, Global Americans, June 14, 2023.