Small countries (or autonomous regions) have an unfair advantage over large nations.

What do Hong Kong, Singapore and Dubai have in common?

• A lot of freedom in re-issuing bills of lading and in arranging trans-shipments;
• A strong trading activity, based in part on the above-mentioned freedom but also on a legal system that is more predictable than in neighboring countries;
• A financial services industry built on favorable tax regimes;
• A strong construction industry benefiting from these other businesses.

I just found a (rather negative) description of the arrangements that are common in Dubai–in the comment left by Bill Waddell, an author of the Evolving Excellence blog:

The real economy of Dubai, however, is built on what amounts to non-violent piracy. Want to get around prohibitions against selling your US-made products into Iran or Syria? Sell to a broker in Dubai. Think the 35% import tariff into India is too high? Your Indian customer has a cousin in Dubai who will buy your product for $20 each, then sell them into India for an invoice price of $10 each, thereby cutting the tariff paid to the Indian government by half. Got a couple of containers of counterfeit name brand goods from China you want to unload – the brokers in Dubai are open for business. Need to buy a couple of containers of legitimate goods from a US or European manufacturer in order to keep your franchise even though you have no market for them? No problem – the diverters in Dubai will take them off your hands and sell them into someone else’s territory at a bargain price. Have some product with Israeli content you want to sell into Saudi Arabia in violation of their laws? The country of origin will disappear when the paperwork comes out of Dubai.

Wouldn’t Singapore and Hong Kong also fit this description?