Pillar 2: Good governance, innovation and entrepreneurship in small states

The pillar discusses crucial issues in the development and administration of small states. Although there is no common definition of small states, there is a shared understanding among small state scholars and inhabitants that the limited scale matters. It has effects on the functioning of the society, public administration, politics and economy.

In many areas of life, small states face different challenges than larger states, both in terms of the nature of problems (for example, small size of the market or limited human capital) and in potential solutions (for example, drawing in specific technologies or expert knowledge). Globalization and regionalization add new complex challenges to the small states. Their economic development often depends on long-term and large-scale investments and growing markets, both lacking by nature in the small states. The specific innovation and industrial policy context of the small states thus demands special attention as well as the specific characteristics of small public administrations designing and implementing the policies.

Compared to the large states, small state governments tend to be characterized by limited scope of activity, multi-functionalism, higher personalism and reliance on informal relations. Consequently, small state context offers both constraints and opportunities. Their impact on the governance of small states, entrepreneurship and innovation is discussed.




This lecture opens the course by discussing various definitions of small states and their implications for understanding the challenges and opportunities for these states.

Anders Wivel, Head of Studies, Professor, Department of Political Science, University of Copenhagen and Baldur Þórhallsson, Professor of Political Science and Jean Monnet Chair in European Studies, University of Iceland.



The seminar focuses on the characteristics of public services in small states and their influence on policy-making and implementation.

Leno Saarniit, Lecturer, Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology, Tallinn, Estonia.



This lecture discusses the national innovation systems of small states and the role of technological innovation for effective and efficient economic systems. 

Tarmo Kalvet, Senior Research Fellow, Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology, Tallinn, Estonia.



The aim of the seminar is to take a closer look at the Estonian public administration and to discuss the lessons that it provides for understanding the challenges and opportunities of small state governance.

Külli Sarapuu, Associate Professor, Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology, Estonia


Additional reading material for Pillar 2

Baker, Randall (ed.) (1992). Public Administration in Small and Island States. Place: Kumarian Press.

Crossley, M., M. Bray and S. Packer (2009). „Education in the Small States of the Commonwealth: Towards and Beyond Global Goals and Targets“. The Round Table: The Commonwealth Journal of International Affairs, 98:405, 731-751.

Edquist, C. and L. Hommen (2008). Small Economy Innovation Systems: Comparing Globalisation, Change and Policy in Asia and Europe. Cheltenham: Edward Elgar.

Freeman, C., and B-Å Lundvall (eds.) (1988). Small Countries Facing Technological Revolution. London: Pinter.

Handel, M.I. (1981). Weak States in the International System. London: F. Cass.

Hommen, L., Edquist, C. (2008). “Globalization and innovation policy”, in Charles Edquist and Leif Hommen (eds.) Small country innovation systems. Globalization, change and policy in Asia and Europe. Cheltenham, UK, Northampton, MA: Edward Elgar Publishing, pp. 442–484.

Kattel, R., Kalvet, T. and Randma-Liiv, T. (2010). “Small States and Innovation”, in Robert Steinmetz and Anders Wivel (eds.) Small States in Europe: Challenges and Opportunities. Aldershot: Ashgate, pp. 65-86.

Lowenthal, D. (1987). „Social Features“, in Colin Clarke and Tony Payne (eds.) Politics, Security and Development in Small States. London: Allen and Unwin, 26-49.

Panke, D. (2010). „Good Instructions in No Time? Domestic Coordination of EU Policies in 19 Small States“. West European Politics, 33:4, 770-790.

Raadschelders, J. B. (1992). „Definitions of Smallness: A Comparative Study“, in R. Baker (ed.) Public Administration in Small and Island States. Kumarian Press, 26-33.

Randma-Liiv, T. (2002). „Small States and Bureaucracy: Challenges for Public Administration“. Trames 6 (4), 374-389.

Sutton, P. 1987. „Political Aspects“, in C. Clarke and T. Payne (eds.) Politics, Security and Development in Small States. London: Allen & Unwin, 3–25.

Tiits, M.; Kalvet, T. (2012). „Nordic Small Countries in the Global High-Tech Value Chains: The Case of Telecommunications Systems Production in Estonia“, Working Papers in Technology Governance and Economic Dynamics, No 38. Tallinn: Tallinn University of Technology.

Veenendaal, W. P. and Corbett, J. (2014). „Why small states offer important answers to large questions“. Comparative Political Studies, 48: 4, 527-549.

Walsh, V. (1988). „Technology and Competitiveness of Small Countries: A Review“, in Christopher Freeman and Bengt-Åke Lundvall (eds.) Small Countries Facing Technological Revolution. London: Pinter, pp. 37–66.


Suggested essay topics for Pillar 2 

  1. ‘Element X’ of an innovation system in a small state: Challenges and policy options. (X refers to one element of an innovation system to be chosen for analysis, e.g. ‘science system’, ‘education and training system’, ‘macroeconomic and regulatory context’).
  2. Public policy-making and implementation in small states – what impact could the small size of a state have on its ability to deal with complex policy problems? Pick a specific policy issue for your analysis. Substantiate your analysis with facts and figures.
  3. Global production and innovation networks: A way out of “smallness”?
  4. What are the key features of small societies? How could the characteristics of small societies affect public policy-making and implementation? Bring examples and substantiate your analysis with facts and figures.
  5. Are small countries weaker in their research and development (R&D) capacities? If so, how can these disadvantages be managed? Give examples on the basis of countries studied during the course.
  6. Discuss the implications of society’s small scale for the application of ‘Weberian bureaucracy’ within public administration. Pick a specific bureaucratic principle and analyze it in depth.