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.
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Spolaore, E. (2018). Size of Nations, Economics Approach to the. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2794
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