The Effect of Size on

A number of hypotheses about the impact of country size on the medium-term growth process in developing countries are tested with the aid of a model of disequilibrium growth, estimated for a sample of forty-eight countries over the period 1975-85. Evidence about the stability of the model's parameters is used to test whether 'smallness' restricts growth by causing 'capital shallowing,' restricting structural change and/or reducing barriers to inter- and intracountry diffusion of technical change. The results indicate that arbitrary definitions of smallness may produce misleading results and that particular features of smallness do constrain specific sources of growth. Copyright 1994 by Scottish Economic Society.