The Impact of Political Dependence on Small Island Jurisdictions

SummaryThis paper examines the connection between political dependence and welfare and development of small island jurisdictions. Four possible advantages of political dependence are access to foreign aid, foreign capital, and external labor markets, and gains in the tourism industry. This study analyzes if political dependence is associated with these possible advantages and the relative importance of each on the welfare and development within the island. It is shown that politically dependent islands have achieved significantly higher levels of welfare and development with some of the reasons being due to the large inflows in the form of tourism, foreign direct investment, labor, and aid.