The Size of Nations

by Alberto Alesina, Enrico Spolaore

The authors of this timely and provocative book use the tools of economic analysis to examine the formation and change of political borders. They argue that while these issues have always been at the core of historical analysis, international economists have tended to regard the size of a country as "exogenous," or no more subject to explanation than the location of a mountain range or the course of a river. Alesina and Spolaore consider a country's borders to be subject to the same analysis as any other man-made institution. In The Size of Nations , they argue that the optimal size of a country is determined by a cost-benefit trade-off between the benefits of size and the costs of heterogeneity. In a large country, per capita costs may be low, but the heterogeneous preferences of a large population make it hard to deliver services and formulate policy. Smaller countries may find it easier to respond to citizen preferences in a democratic way. Alesina and Spolaore substantiate their analysis with simple analytical models that show how the patterns of globalization, international conflict, and democratization of the last two hundred years can explain patterns of state formation. Their aim is not only "normative" but also "positive" -- that is, not only to compute the optimal size of a state in theory but also to explain the phenomenon of country size in reality. They argue that the complexity of real world conditions does not preclude a systematic analysis, and that such an analysis, synthesizing economics, political science, and history, can help us understand real world events.

Genres: Economics, Politics

272 pages, Hardcover

First published November 7, 2003

Reviews

[Nils · Rating 3 out of 5]

Tries to determine why nation states are the size they are, and what the optimal country size should be. The basic argument is that the size of nation states can be explained by trade-offs between (a) the benefits of size — esp. economies of scale in public goods, self-defense, and mutual insurance — and the cost of managing and overcoming the heterogeneity of preferences of republic goods and policies provided by the government. (The optimal size varies of course depending on whose welfare one is maximizing: the people’s or the sovereign’s.)

Major problem with this book is that it largely presume that governance should be delivered in a unitary manner and does not consider that we want certain (large) governance units for those public goods and policies where economies of scale are large and/or heterogeneity of preferences in small (e.g. climate change mitigation) whereas we want smaller jurisdictions for categories of public goods and policies where heterogeneity of preferences is high and economies of scale are low. “It is hard to imagine,” writes Alesina, “ individuals sharing public goods, public property, and policies if they do not share the ultimate monopoly of coercion and legal use of violence.” Try harder!

[Kevin_Raccoon · Rating 4 out of 5]

An interesting book! Country size emerges from a trade-off between the economies of scale in supplying public goods in large countries, and the costs of cultural and ethnic heterogeneity, which may be increasing in the size of countries.