Role of Small Countries in Trade and GDP

This report discusses the role of small countries with less population in increasing the GDP through trade. It evaluates the impact of population on trade and GDP using examples of Singapore, Puerto Rico, and New Zealand.

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Contents
Introduction......................................................................................................................................1
Role of Small Countries in Trade and GDP....................................................................................1
Evaluation of Countries with Industries..........................................................................................2
Singapore – Manufacturing and Tourism Industry......................................................................2
Puerto Rico – Manufacturing Industry........................................................................................4
New Zealand – Agriculture (export)............................................................................................5
Effect of Countries on GDP and Standard of Living.......................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Topic: Small countries with less population and GDP have been benefited with trade
Introduction
The purpose of this report is to enlighten the reader about the role of small countries with less
population in increase the GDP of the company with trade. The report researches information
about the role of population in increasing the trade and GDP of the countries. Various small
countries have been evaluated in the paper to highlight details about how the industries present in
these countries affect the GDP of the nation. The fact should be noted that trade plays a huge role
in increasing and decreasing the GDP of the country. With the help of trade practices initiated in
the environment, the countries get to increase their GDP and become competitive in the global
competitive index. Singapore, Puerto Rico and New Zealand are the three countries taken into
analysis to evaluate the impact of population on the trade of countries. More details about the
research report are discussed below:
Role of Small Countries in Trade and GDP
Size does matter for economic success as countries with low population get to enjoy the trade
activities in the environment. Economic growth of a country is considered on the basis of overall
population of the country. So, if a country having less population and high GDP then it means
the country is performing well trading activities in the environment. Like, Qatar is a small
country having less population but it has highest per capita income as classified by UN. So, it
can be said that low population aspect is providing profitability to the country in the international
market. Borders are not the exogenous geographical feature as they are the human made
institutions (Idris 2016). Even the geographical characteristic of a country are in some sense
endogenous. Population growth plays a conflicting role in the development process of the
country. This process helps in the economic development and it also holds the capacity to retard
the development in the environment. The fact should also be noted that increasing population in
the country, make the country to consume resources for the country itself which in turn results in
degrading GDP of the country (Burke, and Csereklyei 2016). However, the fact is partially true
that low population countries get various advantages in the environment to organize trade
activities for the companies. Low population make the worldwide organizations like IMF etc.

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think of giving subsidies and benefits to the countries present in the market. Resulting in which,
it can be said that low population and GDP can provide growth to trade in the external market.
However, the conflicting role between the population growth and the economic development of
the country can act as both stimulus and impediment to growth in the environment (Picard, and
Tampieri 2019). This type of relationship explains that population and development of the
country through trade shares a complex relationship in the environment. Malthusians and neo-
Malthusians believes that population growth negatively affects the economic development of a
country. Their argument is based on the belief of law of diminishing marginal return in the
industry. Population growth acts as a barrier in the economic development since growth makes
the organization consume the resources in the country only due to which trade is reduced (Ready,
Roussanov, and Ward 2017). So, it can be said that population countries get various advantages
from other countries also and it helps them to trade their products and services in the
international market. Further, it should be noted that if the rate of growth of population increases
the rate of production then the GDP of the country decreases and trade is hampered but subtle
population gets to provide various products and services to the customers of the country also and
they get to trade it in the international market. As the small countries get various advantages in
the world resulting in which countries like Singapore, Luxembourg etc. get to enjoy profitability
in the environment. So, it can be said that population plays a huge role in increasing or
decreasing the trade of a country along with the GDP in the worldwide market (Salas-Olmedo,
García-Alonso, and Gutiérrez 2016).
Evaluation of Countries with Industries
Below mentioned are three countries (Singapore, Puerto Rico and New Zealand) taken for the
evaluation so as to analyse the impact of less population and GDP have been benefitted with the
trade in the environment.
Singapore – Manufacturing and Tourism Industry
Looking at the history of the country, the fact should be noted that earlier the country used to
face problem in trading the products and improving the GDP in the environment but gradually
increasing foreign trade helped the organization to maintain its pace in the environment. So, it
can be said that low population to some extent helps the countries in increasing its trade activities

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in the environment. Initially when Singapore started functioning as an individual country it
prospects were not looking good as there were less natural resources and underdeveloped
functions. Lee Kuan Yew (then Prime Minister of Singapore) was the founding father of Asia’s
smallest but most developed economies in the world (Chandran 2018). Tourism and
Manufacturing were seen as the two major industries that were looking for growth after
separation in the worldwide market. The country aimed to organize its actions in the worldwide
market by contracting with neighbouring countries which subsequently increased the level of
trade in the market. The country gained the advantage to subsequently provide profitability to the
people and transform its rank in the global financial hub of London and New York. As the
population of the country is small due to which the government of Singapore didn’t faced
difficulty in managing its functions accordingly. Less population helps the government in
tightening its grip of power in the environment which reduced the corrupt financial practices as
well (Jadoon, Rashid, and Azeem 2015). Further, it should be noted that as the country is situated
near largely populated countries due to which, the country gained the advantage to export
products so as to meet the demand of overseas market. The inside demand of the country was
gradually satisfied due to which the companies present in manufacturing industry starting
exporting it products in the external market.
Further, it should also be noted that Singapore is known for tourism as the country attracts more
than 17.4 million international tourists every year. People who like to travel wish to visit places
that are well maintained, resourceful and are not highly populate. So, the fact should be noted
that less population helps Singaporean to use their resources wisely and maintain the nature also
due to which subsequently GDP of the country increases due to increasing tourism industry of
Singapore (Nowak 2017). In the year 2018, International Visitor Arrival was increased by 7.3 %
in the environment. The fact should be noted that tourism in Singapore is attractive because the
people of the country have managed to maintain the culture and resources intact due to which
visitors get attracted towards the country. Low population and GDP also reduce the value of
Singapore dollar in respect to the US dollar due to which tourism is increased as people going to
Singapore have to spend less as compared to other countries (Ridzuan, et. al., 2018).
Thus, the fact should be noted that in the current situation, Singapore is progressively growing
because it has achieved the trade margin in the environment and maintained relationships with

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the countries worldwide. Less number of people in the country helped Singapore to grow by
trading with the demand of international market.
GDP Graph of Singapore
Puerto Rico – Manufacturing Industry
The population rank of Puerto Rico in the worldwide market is 134 and the GDP of the country
has reduced by 0.11%. The population of the country Puerto Rico is 3,706,690. However, it
should be noted that now the country has become one of the most dynamic and competitive
economy present in the worldwide market. The country has shown highly explicit growth in
Latin America and Caribbean region. The economy of the country majorly depends upon the
federal help from the United States government as earlier it was a part of the US only. In the
country Puerto Rico, initially Agriculture was the main sector that provided benefits to the
economy however, it was further replaced by manufacturing (Wagner 2017). Thus, it should be
noted that there are various well performing industries present in the country that are aiming to
improve the GDP of the country. The country is leading trader of pharmaceutical, petrochemical,
processed food etc. products in the environment. Along with this agriculture of the country also
provide them several benefits in the environment. One of the biggest advantages of GDP of a
small country is that the companies easily get to meet the demand of the customers present in the
industry; along with this they gain the advantage to supply the additional resources in the

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worldwide market as well (Ready, Roussanov, and Ward 2017). The country Puerto Rico enjoy
surplus trade benefit in the environment because initially it was a part of US and then after
separation, The United States started maintaining good relation with the country due to
availability to raw material and less trading cost as well (Bulman, Eden, and Nguyen 2017).
Resulting to which, major trading transactions of Puerto Rico was initiated with US only due to
which the economy of the country subsequently grew. The problem with highly populated
countries is that they do not have adequate resources to manage the demand of the people due to
which they trade resources with smaller countries having low population as they have sufficient
or more than sufficient resources to manage the demand of their people. Resulting in which the
smaller countries get to maintain a trade relationship with countries having prosperous GDP.
Also, these countries enjoy benefits while trading with bigger countries because of their size.
Thus, it is a clear example that explains that why smaller countries having low GDP enjoy better
level of trade in the environment. The larger countries also attain these goods from Puerto Rico
at an optimum price due to which they give large contracts to them only (Dietz 2018). Thus, the
manufacturing industry of Puerto Rico is profitable because they have optimum resources to sell
the products as low prices which automatically attracts the large countries in the environment
and make them trade with such countries for a mutual benefit in the environment. US is the
major trading partner of Puerto Rico that accounts for majorly 90% of the export with the
country and nearly 55% of import which makes the country profitable in the worldwide market.
The country shifted the labour force from agriculture to manufacturing segment as the US made
the tax code exempted in the country. In the year 2018, the country accounted the trade surplus
of 1058.20 USD Million which expressed profitability for the country in the external
environment. The fact should be noted that every small scale organization is supported by are
large country present in the market that helps them to sustain their growth and attain quality GDP
as well (Kristjánsdóttir 2016). A large and small country maintains a mutual relationship in the
environment that helps both of them to attain competence in the global competitive index.

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New Zealand – Agriculture (export)
The current population of New Zealand accounts to 4.79 million in the year 2019. Further, the
country is ranked on the 127th position in terms of population rank. The country New Zealand is
a major exporter of agriculture products in the environment. The country is a trade dependent
economy that is a geographically distant country from export markets; the country is a firm
supporter of free and open trade which provides one of the best open market economies to the
country in the worldwide market (Donaubauer, Meyer, and Nunnenkamp 2016). The prosperity
of the country New Zealand depends upon the trading activities that they initiate in the
environment. Free trade activities help the country attract more countries to trade with them in
the environment. Thus, higher degree of export accounts more profitability for the country.
Further, as discussed above that every small country maintain a mutually beneficial relationship
with large country in the environment (Mika 2017). So, New Zealand maintains strong exporting
relationship with Australia, USA, China and Japan. The country makes use of high tech
components and agricultural goods in the environment. The country has 53rd largest economy in
the worldwide market because they specifically focus on maintain relationship with large
countries that have high demand of agricultural goods in the environment (Fu, et, al., 2018).
Further, the fact should be noted that small countries with less population and GDP benefits the
trading activities of the country such a way by offering their unique products to countries having

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its deficiencies in the environment. Along with this, the country also provides attractive features
like free trade agreement so that the large country aims to create a long term relationship with
them due to which the GDP of small country is subsequently improved (Kahouli 2016). The
country New Zealand bags 12th largest position in agricultural exporter in the market as the
country has adequate resource along with technology and less governmental regulations due to
which they attract more countries to trade with them in the market. The free trade agreement is
one of the most attractive factors that help the country to attract trading activities in the
environment. The complete non-agricultural exports of the country are showing steady growth of
1% in the environment. The act of liberalization between the economies helped the country to
attain qualified technology in the environment to function properly. As the country received
technology at a comparative lesser rate due to which the efficiencies in their services
significantly increase (Ng, Venkataramany, and Bhasin 2016). The country exchanged
technology in respect of their agricultural goods due to which the economy of the country New
Zealand subsequently grew. Partnership and alliance of the country with many major countries
helped the country in attain back up support in the environment as the country has US and
Australia to support the functions of the country in the environment (Shakur, and Tsang 2017).
GDP Graph of New Zealand

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Effect of Countries on GDP and Standard of Living
An important fact should be noted that GDP of a country can be affected in both negative as well
as positive ways with the activities of a small scale country present in the target market. As
discussed above that there are various ways in which less populated countries brings the best out
of the economy for the GDP of those countries. Less populated countries provide advantage to
more people present in the industry to work with them. The standard of living of the people is
also subsequently improved as they get to share profitability in the environment. Thus, it can be
said that in a less populated country there are less people to fight with due to which chances to
become profitable subsequently increases (Cantore, and Cheng 2018). However, the same low
population increases the difficulty in the working of many countries as well. It increases the
threat the large countries might not work with small countries due to ineffective GDP or because
they do not have trust on the goods and services provided by low populated countries. Less
population also increases the problem of manpower, as there is few numbers of people present in
the industry who are already occupied by various countries due to which the companies might
not come under such countries because of the problem of educated labour. Lastly, the fact should
be noted that the overall impact of population is laid positively on the standard of living and
these people have now learned how to manage their functions at small scale and earn profits as
well (Awdeh, and Hamadi 2019).
Conclusion
Thus, in the limelight of above mentioned events, the fact should be noted that the above
mentioned paper represented information about the impact of less populated countries on their
GDP. Population, GDP and trade all the three components are interconnected and greatly affect
each other as well. The paper elaborated the role of population in affecting GDP with the
elaboration of three countries and its industries present with them. The countries explain how
their less population feature helped them to increase the level of trade in the country. Thus, it
should be noted that population has both positive and negative impacts on the GDP of a country;
it all depends on how the country treat it as a flaw or a feature present in the environment.

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