When a state is big it benefits from the size of its internal market, but the greater heterogeneity of the population makes it difficult to satisfy its aspirations. In a smaller state, there are less benefits of scale but it is easier to give a democratic response to the population’s demands. This is set forth by Alberto Alesina and Enrico Spolaore in “The size of nations”, in which they endeavour to analyze the reason for borders from a perspective of political economy.
Thus, in a context of conflict and protectionism, bigger states are useful because they accumulate more strength to defend what is essential. On the other hand, in a situation of peace and commercial openness, small countries which know how to internationalize their market have many advantages because they maintain intact their ability to satisfy democratic preferences. And when small states are viable, free trade promotes regional autonomy and secessions, creating new states from other bigger but less effective ones.
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