Beautiful But Costly: Business Costs in Small Remote Economies (Economic Paper)

There are potential commercial disadvantages of smallness in the global economy due to the excessive cost of international transactions for small and remote countries and the excessive costs of non-traded inputs into efficient industries. This implies that very small economies might lack sufficient absolute comparative advantage for trade – i.e. have no good or service which they can export competitively. In this case, free trade will lead to no trade.