Small States Down Under? an Antipodean Test of Katzenstein's 1985 Model

Since its publication in 1985, Katzenstein's Small States in World Markets has been extremely influential in explaining the policy responses of small European states to their vulnerability in the international economy. The Katzenstein framework has also been important in underpinning accounts of public policy in the non-European small states. In particular, it forms the basis of the 'domestic defence' model (Castles 1988; 1989), which has become the dominant account of the policy pattern in Australia and New Zealand throughout the twentieth century. The application of the arguments in Small States to the case of Australia and New Zealand provides the opportunity to indirectly assess the generalisability of Katzenstein's model. In this paper we argue that an assessment of the domestic defence model reinforces many of the criticisms that have recently been levelled at Small States in the European context. Some of these criticisms have their basis in dissatisfaction with the institutionalist flavour of the model. This resonates with our analysis of the Australasian case, which elevates the importance of considering political-economic interests as well as institutions. We find that the institutionalist bias of much of the comparative policy literature on Australia and New Zealand skews conclusions regarding similarity and difference between the two in terms of policy processes and outcomes.