and benefits from the Law of the Sea. He also finds small states receive more official development assistance (ODA) relative to size of the economy and population than other developing countries. This is confirmed by a World Bank study<sup>8</sup> which found that from 19992003 small states received an annual average of $201 annually per capita in aid, compared to an average of $12 for all developing countries, or $18 per capita when China and India are excluded, and aid to small states averaged almost 15 percent of GNI per annum as opposed to only 1 percent of GNI for all other developing countries.

Domeland and Gil Sander (2007)<sup>9</sup> argue “smallness” is an advantage in the African context. They find that, compared to other Sub-Saharan African countries, small states in Africa have stronger governance, more political stability and lower incidence of armed conflict and state failure. Small populations equate with less ethnic groups and lower degree of ethnic fractionalization which is found to lead to uncoordinated rent-seeking activities, weak central government controls and corruption. The empirical evidence shows that, after controlling for measures of ethnical fragmentation, being small lowers the probability of armed conflict by more than 10 percent. Small states in Africa were not found to be disproportionally affected by crisis caused by natural disaster or terms of trade shocks but when a crisis took place small states recovered much faster than other countries in the region. In contrast the 2008 Growth Report<sup>10</sup> found small states face three important disadvantages: absence of economies of scale, both in production of goods and the provision of public finance; vulnerability to the impact of natural disasters; and the combination of concentrated economic activity and geographic remoteness which pose a barrier to integration into the global economy. Briguglio<sup>11</sup> also argues that small states have relatively larger government costs; higher per unit costs due to problems of indivisibility; frequent natural disasters; erosion of preferential treatment; and persistent fiscal deficits which contribute to higher public debt levels.

Researchers may differ on whether or not "small is beautiful", but there is broad agreement in the literature regarding other characteristics of small states. Social and educational indicators are relatively good and GNI per capita and GDP growth are not found to be systematically worse in small states. On the contrary, researchers tend to argue the opposite. After examining whether income levels in 33 small states with population of less than 1 million are different than other states Easterly and Kraay<sup>12</sup> concluded that, after controlling for location, small states have higher

> 8 Independent Evaluation Group of the World Bank, IEG _Small States: Making the Most of Development Assistance._ Washington DC: The World Bank 2006

> 9 Domeland, D. and Gil Sander, F. _Growth in African Small States_ Working Paper, The World Bank 2007

> 10 Commission on Growth and Development _The Growth Report: Strategies for Sustained Growth and Inclusive Growth and Inclusive Development_ . World Bank 2008

> 11 Briguglio, L. (2009) Small States: Debt Issues and Forward Strategy. Prepared for the Symposium “ Small States: Weathering the Global Crisis”. Washington DC: The World Bank

> 12 Easterly, W., and Kraay, A. (2000) “Small States, Small Problems? Income, Growth, and Volatility in Small States.” World Development 28 (11): 2013–27.

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