It is to assess the impact of EU policies on the economic performance of small market economies within the EU, with special emphasis on Cyprus’s economy. Overall, there is a wealth of solid scientific research into the problem. Whereas books provide a comprehensive analysis of the relevant data and newspaper articles enlighten the reader on the latest developments in the region. Though the literature on the subject is abundant, there are some limitations in research too. A common thread from all sources reviewed suggests that EU policies have had an ambiguous effect on the economic performance of different small EU member-states.
It would be wise to start this literature review by looking at how experts determine which EU economies are small and which are not. Today, there are as many approaches to defining small economies as there are scholars researching the problem. Indeed, there is no single yardstick by which to measure whether or not a particular economy is small. Some researchers look at the geographical area of the country and the amount of natural resources it has (Castello & Ozawa, 2014). It is with the believe that those factors are inexorably linked to the economic ability of a country. Others determine the country’s affiliation with a particular pool of economies by simply looking at its GDP (Gal, 2009). For example, Castello and Ozawa (2014) classify Belgium and the Netherlands as “small economies” (p. 29), even though the two countries have relatively competitive macroeconomic indicators. Ronald Schettkat (1999) broadens the list to include Ireland, Denmark, and Austria. Although the number of EU member-states was smaller in 1999 and the economies of Austria and the Netherlands were weaker, they could be hardly classified as small. One plausible explanation for regarding these states as small economies is that some of their industries are characterized by concentrated market structures, which is a criterion of a small economy
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