The article explores how the term premium, which is the extra return investors want for holding long-term bonds, works in a small open economy. Using a detailed economic model, the researchers studied how global influences and openness affect this bond premium. They found that technology spillovers from the global economy are critical in shaping the term premium in the small open economy. The research shows that while the open economy can handle local shocks better, it also faces higher term premiums due to foreign technological impacts. These conflicting effects largely balance out, resulting in a term premium similar to what a closed economy would have. In simpler terms, being connected to the global economy can both decrease and increase the extra return investors demand for holding long-term bonds in a small open economy.