Foundations of the Digital Economy in Small States

Abstract

'Small states' is a term of art with no fixed or official definition. It usually refers to countries that are small in land mass and/or population size. There are vast differences, however, among small states. Small Island Developing States (SIDSs) differ in many respects from more affluent small states; a common policy objective among the majority of small states (both developed and developing) is pursuing strategies to capture the economic growth and benefits of the digital economy. This article examines how small states can set frameworks for establishing digital infrastructure, the so-called 'first pillar' of the digital economy. Robust and inexpensive information and communications technology (ICT) is the sine qua non of the digital economy. Funding, ownership, control and competition with regard to digital infrastructure are common problems across all small states. This article considers the manner in which three small states approach the first pillar: the Kingdom of Tonga, a SIDS with a lower middle-income level; the Republic of the Seychelles, a SIDS with middle to high-income island nation and the State of Qatar, a high-income small state. For SIDS, we find that majority government ownership of ICT infrastructure is the critical success factor.