FOR NATIONS, SMALL IS BEAUTIFUL By Gideon Rachman
Friday, December 07, 2007
Europe seems intent on slicing itself up into ever smaller pieces. In the next month, Kosovo is likely to declare independence - making it the seventh new country to emerge from the wreckage of Yugoslavia. The Soviet Union has given way to 15 new states. Even in western Europe, there is talk of Belgium dividing in two, while a pro-independence party has taken power in Scotland.
People tend to treat countries that split up a bit like married couples. It is a sad event. And it is true that a unilateral declaration of Kosovan independence could cause a new crisis in the Balkans.
But if the formation of new countries can be achieved peacefully, it is usually a cause for celebration. This is the age of the small state.
Look at almost any league table of national welfare and small countries dominate. The International Monetary Fund's ranking of countries by gross domestic product per capita shows that four of the five richest countries in the world have populations of less than 5m. (The US - placed fourth in wealth-per-head - is the exception.) The Global Peace Index, produced by the Economist IntelligenceUnit, ranks nations by criteria such as homicide rates and prison populations and it too makes pleasant reading for pocket-sizedcountries. The most peaceful place on earth is, apparently, Norway (quite cold, though) and eight of the 10 most peaceful countries have populations of less than 10m.
The World Economic Forum's competitiveness index suggests that five of the seven most "competitive" countries have populations of less than 10m. The Human Development Index - which ranks countries by measures such as life expectancy and education - places only one large country in its top 10: Japan.
Look at the issue from the other end of the telescope and you can see why it pays to be small. Of the five most populous countries in the world, only the US is rich. Brazil, China, India and Indonesia are growing fast, but they still rank as developing nations. Governing them presents awesome challenges.
I remember visiting Palaniappan Chidambaram, who was then India's trade minister (he is now finance minister), some years ago. Mr Chidambaram seemed a little depressed,so I asked what was bothering him. He groaned and said that he had been visited by Finland's trade minister. This alone did not seem like a cause for melancholy, so I pressed him further. "Do you know what the population of Finland is," he asked? "Five million. We have 5m blind people in India."
Of course, Indians are not always downcast by the size of their country. In fact, they sometimes boast that India is on track to overtake China as the world's most populous country.
But taking pride in the sheer size of your country is increasingly anachronistic.Traditionally it has been good to be a big country for two main reasons: prosperity and security. A big country meant a bigger market and so more trade and wealth creation. A large nation was also more powerful and less likely to be invaded.
But in the modern world, both these advantages seem to be diminishing.
Globalisation has opened up markets across the world. China and India are getting richer largely because they have access to the markets of the developed world, not because of the size of their domestic markets. Small countries can trade their way to success even more swiftly. Think of Singapore or Switzerland.
Small is also no longer synonymous with insecure.
In Europe, many minnows have enhanced their security by joining Nato. This is sometimes denounced as free-riding. Belgium or Luxembourg can afford to be small, secure and smug - because they are under the security umbrella, proffered by big and generous Uncle Sam.
But joining a collective security organisation is not an absolute necessity for a small country. Ireland and Switzerland are not members of Nato - and neither appears to be in imminent danger of invasion.
The fact is large countries are now less instinctively expansionist than they were in the days of empire. These days, invading and occupying small countries can be a massive painin the neck - as the US has discovered in Iraq and Afghanistan.
Since the traditional disadvantages of being a tiddly country are disappearing, you are just left with the advantages.
Above all, small countries tend to be more homogenous. This makes them less prone to civil strife or dictatorship. It also means higher levels of social trust - which may be why small Scandinavian states are willing to spend so much on health and education and fare so well on human development indices.
Governments in small countries also find it easier to craft and implement policy - an advantage that might be replicated in the US by federalism. Small, homogenous countries should also be less tempted to waste money on pork-barrel projects, designed to buy off discontented minorities.
Declaring independence is also a splendid marketing gimmick. Who gave much thought to the Baltic states when they were part of the Soviet Union? But now a country like Estonia has a distinct international identity - which is very useful in attracting tourists and investment.
Given all this, it is hardly surprising that the number of new nations is proliferating. In 1945, the United Nations had just 45 members. By 1968, after decolonisation, it had 126 members. Now the number of nations represented at the UN is 192. Drink a toast to the age of the small country when it breaks 200.
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