Measures of success

Is there a perfect size for a country? Economist says yes

Most of us think of national borders as fixed, geographic features such as rivers or mountains. But Enrico Spolaore has been studying how borders are instead created by people based on a variety of factors that influence the size and success of a country.

enrico spolaore

Enrico Spolaore © Mark Morelli

In his book The Size of Nations (MIT Press, 2003), written with Alberto Alesino of Harvard, Spolaore explores the optimal population of countries, determining that variables such as international conflict, politics and free trade influence a country’s success.

Spolaore, associate professor of economics, came to Tufts in September after spending six years at Brown. He studied economics in his native Italy and then earned a doctorate at Harvard.

His book, which will be issued in paperback in March, is an attempt to show how economic thinking can be used to study the evolution of the size of a country.

Views on the optimal and actual size of countries have varied over time. Plato calculated that a state should have 5,040 heads of family. At the end of World War II, there were only about 70 countries, while today, there are nearly 200. More than half of these countries have fewer people than Massachusetts, which has a population of about six million.

Large vs. small
The book says there are both advantages and disadvantages for large and small countries. Larger countries are more likely to be economically viable when there are barriers to international trade, providing larger domestic markets for goods and services produced by their citizens. They can also raise what is needed in taxes more readily. However, larger nations are less likely to be responsive to the preferences of the heterogeneous groups that tend to populate a large country. The Soviet Union, for example, could not satisfy the diverse groups that made up the bloc and ultimately dissolved into smaller countries.

Small countries are more likely to be responsive to their homogenous populations but are dependent on other nations for trade and technological innovation. If there is free trade and little conflict, smaller countries can be quite successful. “In an open world, a country can be small and prosper,” said Spolaore. “If you have an external threat, you want to have a more cohesive unit and be large.”

Countries that close their borders and also try to be self-sufficient are not successful, said Spolaore, especially when they are small. An example, he said, is Albania before the fall of communism. The country was small and economically isolated, and it had achieved a very low standard of living, even when compared with other countries of the communist bloc. By contrast, other small countries such as Iceland or Luxembourg have prospered by being very open to foreign trade and technologies.

At the beginning of its history, the United States became more cohesive because of the threat of the British, said Spolaore. When the South seceded, the resulting Civil War “created almost a taboo about drawing political boundaries,” he said. “So what resulted was a decentralized government with strong states rights. Historically, America has survived as a large country because of its system of checks and balances and because of decentralization.”

Spolaore said that China, the largest country in the world, has tried to be closed but is now open to trade and relations with other countries. “Could it break up like the Soviet Union did or will it stay very large and highly centralized and not democratic?” he asked.

Politics and economics
Spolaore said he came to Tufts because of the prospect for interdisciplinary research and collaboration with other departments and schools. “When you talk about the formation and break up of countries, it’s clear you are talking about interdisciplinary studies,” he said, noting that his work crosses its own borders, reaching into political science and international relations.

Are current political borders efficient from an economic perspective? Spolaore’s research suggests the answer is no. “Over history,” he said, “political borders have been set by dictatorial leviathans—emperors, kings, colonial powers—with general disregard for citizens’ preferences. Only recently, with democratization, have borders been somewhat adjusted to citizens’ ideals,” Spolaore said. “But democratization and secessions bring about their own political and economic inefficiencies. Really successful countries are those with institutions and social norms that allow the maximization of benefits from heterogeneity and the diversity of preferences, skills and other factors while minimizing the costs.”

Spolaore’s personal life, too, has transcended borders. He met his wife, Deborah Menegotto, when both were studying for their doctorates at Harvard. Menegotto, who joined the economics department as a lecturer this semester, grew up in Brazil, but the two discovered they had international connections. Menegotto’s great-grandparents moved from Italy to Brazil at the end of the 19th century from a town only 10 miles away from where Spolaore’s grandparents lived.

When the couple met, they spoke in their common language of English, but each soon learned the other’s language. Spolaore speaks to the couple’s 6-year-old son, Edoardo, in Italian; his wife speaks to the boy in Portuguese.

While Spolaore specializes in macroeconomics, his wife’s area is microeconomics. The pair wonders if their son will one day embrace the third main area of economics, econometrics, which applies statistical tools and techniques to economic issues and data.