What is the Optimal Size of a Country?
February 24th 2010 23:41
People often cite being a large country as one of the advantages of the United States. Presumably, it allows the U.S. to have a large market and specialize in several different types of tasks. However, when one looks at different indicators of a successful country, it appears that being SMALL, rather than large, is the true advantage. (See HDI and GDP/capita for two examples)
In the 1800s, the United States had an influx of immigrants and was also reaping the benefits of the Industrial Revolution. In the interwar period, protectionism greatly increased throughout the world. This is where the U.S. being large came in handy. It is one thing for a country like the U.K. to not have trading partners, but the United States is essentially comprised of 50 small to medium-sized countries with free trade agreements. While the rest of the world was building barriers to trade, the United States had "international" trade occurring within its borders. It was around this time period that the United States truly emerged as the global leader.
Since WWII, the barriers to trade have come tumbling down internationally. Therefore, the advantage of being a large country seems to have faded away. Since the 1970s, the U.S. economy has been growing at a slower pace (large batch of environmental and safety regulations in the 70s? EPA, OSHA, etc.?). As well, the role of government in the economy has been expanding, though still below the welfare states in Europe. The evidence seems to indicate that the American model may need a shakeup. American Union anyone? Charter Cities?
Follow me on Twitter: @AGoldenDoor
In the 1800s, the United States had an influx of immigrants and was also reaping the benefits of the Industrial Revolution. In the interwar period, protectionism greatly increased throughout the world. This is where the U.S. being large came in handy. It is one thing for a country like the U.K. to not have trading partners, but the United States is essentially comprised of 50 small to medium-sized countries with free trade agreements. While the rest of the world was building barriers to trade, the United States had "international" trade occurring within its borders. It was around this time period that the United States truly emerged as the global leader.
Since WWII, the barriers to trade have come tumbling down internationally. Therefore, the advantage of being a large country seems to have faded away. Since the 1970s, the U.S. economy has been growing at a slower pace (large batch of environmental and safety regulations in the 70s? EPA, OSHA, etc.?). As well, the role of government in the economy has been expanding, though still below the welfare states in Europe. The evidence seems to indicate that the American model may need a shakeup. American Union anyone? Charter Cities?
Follow me on Twitter: @AGoldenDoor
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