Abstract
The economics approach to the size of nations proceeds from the trade-off between benefits and costs of larger size. Benefits of scale come from sharing public goods among more taxpayers. Larger countries can also better internalize cross-regional externalities and insure against regional shocks. But a larger size brings about higher heterogeneity of preferences over public policies. The trade-off depends on the domestic political regime and on the international environment. In a world of free trade and low international conflict small countries can prosper, while a large size matters more when trade barriers and conflict are high.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Spolaore, E. (2008). Size of Nations, Economics Approach to the. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2794-1
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DOI: https://doi.org/10.1057/978-1-349-95121-5_2794-1
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