The Penning Drop: Former member of the Board of Directors of the World Bank Group Adnan Hassan on the untapped power of small states (Opinion)

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Adnan Hassan


Of the nearly 190+ states in the world, the focus is often on the actions of a powerful few big states, e.g. the US, China, Russia, or other members of the so-called “Group of 20.” In doing so, the global system underestimates the power of small states. Many assume that small states are insignificant. Indeed some are small islands, and some are indeed poor. But many are neither. As a "new world order" emerges, especially post-COVID, small states can have significant influence. Collectively the untapped power of small states is worth understanding and leveraging. It is a geopolitical and investment opportunity, including a new financial ecosystem.

By the United Nation’s definition, small states are entities with populations of 10m or less. Under this definition, 142 small states have 75% of UN votes; 85% of the top 20 richest countries are small states, and 100% of the world's oceans are bordered by small states. Small states are at the frontier of sustainability and innovation. They are the most vocal on issues of climate change, global trade, and the future of globalization since for them these are existential issues. Small states are diverse, truly global, and distributed in all 5 world regions, that is in the Caribbean/Latin America; Europe; Med/Gulf/Indian Ocean; Africa; and Pacific/Asia. Small states can be both the source and recipient of liquidity and deal flow. They have a diversity of projects, and enough have bankable opportunities for both public and private capital. By being fast and nimble, small states also lead innovation, especially in areas such as FinTech and Decentralized Finance (DeFi).

Small states are powerful when they are aggregated. One would think that their geographic and circumstantial heterogeneity will inhibit the creation of a common framework. But this does not have to be the case. In the 1980s, the diversity of “emerging markets” also raised the same concerns. But a shift in mindset was triggered by a change in nomenclature.

Until the 1980s, most of the post-WWII global capital was still flowing only to the US, Europe, and Japan. Little went to so-called “Third World” countries. Many felt that this was a kind of market failure. Investors were ignoring bankable opportunities in these “third world countries.” From a global public policy perspective, the world needed to fix this. So, the World Bank Group in Washington, D.C., via its private sector arm, the International Finance Corporation, drew attention to this market failure by creating a new “emerging markets asset class.” At that time, this was considered a novel and risky undertaking by trying to group geographically and circumstantially heterogeneous countries into a single category. But it worked. Today this asset class is a $32.5 trillion market.

Applying the same logic of innovation, the creation of a “Small States Asset Class” will diversify the global flow of funds into and from small states, and bring greater investments to and from these markets.

Building on this thesis, a “Global Bank for Small States (GBSS)” can also create focused value. A GBSS built on a public-private partnership and run on commercial principles will help mobilize sovereign, private equity, and pension funds and diversify risks across a broad spectrum of states. Such a GBSS can mobilize new funding for small states, including on climate mitigation. It can be a powerful mobilizer of financial, intellectual, and social capital. Sitting on a Blockchain/FinTech platform will make GBSS a leading tech entity also, promoting standards across different domains. At its core, the GBSS would be built as a public-private partnership for global change. ‘South-South’ flows of capital between small states should also increase via such a construct.

The world needs innovative approaches for development and for risk mitigation. We shouldn’t let the big states exclusively dominate the narrative of an emerging ‘new world order.’ Looking to small states to collectively play a bigger role in world affairs is both a political and investment opportunity, and can also help mobilize decentralized finance. Creating a small state asset class and a GBSS will give us practical instruments to correct mistakes in the mindset that have prevented us from tapping the power of small states and accessing the underlying opportunities that they offer.


After holding senior positions at the World Bank Group, Adnan Hassan served on the group's Board of Directors as a special advisor in Washington. As an advisor, entrepreneur, investor, author, philanthropist, and influencer, he's led multiple tech start-ups and is a tech pioneer who established one of the world's first internet-based trading platforms. He is Chairman & CEO of the BIG Ideas Foundation and Mindful Ventures, B.V and founder of "The Global Bank for Small States". He is also the best-selling author of the book "A Practical Guide to Sovereign Wealth Funds".