That’s according to Dr David Skilling, who also warned delegates at The Competitiveness Institute conference in Auckland not to make the mistake of thinking of small countries as just larger ones scaled down. In Skilling’s view, they are fundamentally different and therein lie some competitive advantages.
Skilling is well known in business circles as the founding chief executive of privately-funded think-tank, the New Zealand Institute.
He is now director of Singapore-based Landfall Strategy Group. He is also senior adviser, strategy, to the Secretary of Foreign Affairs and Trade in New Zealand.
In that role, he provides advice on the implications for New Zealand of the changing global economy.
Skilling says many small advanced economies have outperformed larger economies in the past couple of decades.
He says there is “something intrinsic” in small countries that enable them to more easily tap into common sense of purpose.
This is helpful, he says, but it doesn’t determine outcomes.
“There’s something in the policy mix of small countries,” says Skilling. “There’s something in the way they interpret, and respond to, the world.”
He points out there is no one template for smaller economies, but notes common traits include placing high emphasis on R&D, knowledge and innovation, and investing heavily in education.
“Many small countries have overcome what historically has been the tyranny of small size by expanding very aggressively into global markets.
“The level of exports as percentage of their GDP is about twice as high as that of larger economies.”
Skilling says many smaller countries seem to have cracked the code as to how to perform strongly in the global economy.
“Small countries, in general, have much more deliberate approach to economic policy… They figure out their value proposition….
“They understand how they want to be positioned in the world, who their partners are, and what relationships and alliances they want to establish.
“They’re active in free trade agreements and national groupings. And they are very thoughtful about managing risks.”
Skilling says smaller countries seem to better understand the dynamics of global economy and what works.
“Small countries are the canaries in the mine of the global economy,” he says.
“So look to the small.”