Scott Sumner  

How will the rise in nationalism impact the number of countries?

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When I was younger, I associated nationalism with country formation. Poland and Czechoslovakia became countries after WWI, India and Pakistan (and later Bangladesh) achieved statehood after the British left India, and Slovenia and Croatia after the break-up of Yugoslavia. Nationalism was always a factor. Each nation wants its own country. Notice how the Kurds (famously the largest group without a country) keep fighting for independence. So it seems like nationalism should lead to more countries.

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However, the rise in nationalism could well weaken organizations such as the EU and NATO, indeed there are indications that this may already be occurring. And those organizations probably benefit small countries more than large countries. A small country lacks a big enough internal market to achieve maximum economies of scale, and hence it benefits greatly from access to a big free trade zone. And obviously Estonia would have more trouble defending itself from Russia than would France or Britain (and not only because it's closer.)

In that case, do doubts about the survival of the EU and NATO make places like Scotland and Catalonia less likely to seek independence?

What do you think?

PS. This NYT article discusses 10 potential new countries. The article if full of tidbits for lovers of the arcane:


(Tuvalu recognized Abkhazia in 2011 but retracted its recognition in 2014).


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COMMENTS (17 to date)
AlanG writes:

What a wonderful post to conjecture about. When I was growing up in the 1950s my favorite book was a well worn Rand McNally atlas that I received as a give in 1955 (eight years old) and I spent hours looking at national boundaries and trying to understand things from a atlas macro view. That atlas showed German still partitioned four ways and of course there were hardly any free African countries.

Anyway to the point of the question. Tribal nationalism is extremely powerful and can only be conquered by a strong leader (post-war Yugoslavia under Tito). The old Austro-Hungarian empire ultimately collapsed because of leadership issues (with WWI delivering the coup de grace). The final break up of the Ottoman Empire after WWI was imperfect because of the meddling from France and England. One wonders how stable the region would have become had it fractured according to true tribal-nationalist lines (we likely would have a Kurdistan today).

Catalonia continues to press for independence but interestingly, little is heard these days from the Basque region in Spain where there once was a strong push for independence accompanied by some terrorism. I don't think either of them become independent for economic reasons. they are too tied into the existing Spanish economy.

Brexit will increase the chance for Scottish home rule and leaving the UK. I don't know about Northern Ireland. The were anti-Brexit and there are much improved ties with Ireland. However, the religious animosity might argue against a unified Eire. My bet is both things happen.

There is a good chance for a separation of Flanders from Belgium. What I don't know is whether it will be absorbed into The Netherlands.

Market Fiscalist writes:

I'm hoping that California will declare independence soon.

Matthias Görgens writes:

Keep in mind that nationalism in eg 19th century Germany or Italy was a force reducing the number of souvereign entities.

Fralupo writes:

I'll have to dig out my copy of "The Size of Nations" to see what they say, but I seem to recall that the authors found that globalization and peace tend to make smaller countries economically efficient while trade barriers and war make larger countries (e.g. empires) more efficient.

The recent Scottish referendum debate made it clear that the wars that the UK has been involved in since 2001 (coordinated by NATO in a few cases) have encouraged not discouraged that country's independence movement.

Scott Sumner writes:

Thanks Alan.

Matthias, Interesting point.

Scott Sumner writes:

Fralupo, I agree.

Lorenzo from Oz writes:

David Friedman's 1977 article on the Size and Shape of Nations is useful starting point.
http://www.daviddfriedman.com/Academic/Size_of_Nations/Size_of_Nations.html

Start with four assumptions for the pre-1820s world:
(1) Land and trade are the only two significant sources of revenue.
(2) Income from land increases constantly.
(3) Administration has diseconomies of scale.
(4) Revenue from trade has positive economies of scale.

Then, the higher the trade revenue to be harvested, the larger the states.

Since globalisation only begins in the 1820s (when steamships and railways start seriously creating converging prices and global markets), it's first effect was to increase empires (which peaked in 1941 with the Anglo-Soviet occupation of Iran), because it increased trade.

The Great Enrichment also added labour income to land and trade as serious revenue sources--capital is hard to tax (except by things such as excises) and its main effect was to increase labour income and put people into firms (rather than households as productive units) which became much more transparent basis for taxing.

The effect of that was to undermine empires, because ethnic similarity provided a much more effective way to manage the labour taxes/expenditure/public good trade-off which dominated state activity. (ALL the former European imperial states make far more from their local citizens as national entities than they ever did as imperial ones.)

(ASIDE: David Friedman's original analysis underestimated the ability of state's to use public goods to increase trade.)

The EEC fostered increased trade. But then it decided it really wanted to a super-state and attempted to engage in tax/expenditure/public good trade-off at a level which was not efficient. (See the Euro--especially reading Krugman's "Revenge of the Optimal Currency Area" in the light of above.)

Peace encourages smaller entities. Globalisation in itself--as we have seen, it depends.

The more the centre attempts to micromanage, the more capacity it has to alienate areas with different senses of identity. The "EU peace" deal makes it safer for smaller areas to agitate to leave, while national and EU centralisation gives them more reasons to feel unloved and annoyed.

Screwing up migration and border control so one imports significant and growing local counter-identities does not help.

BTW Highly conformist medias are, in their own way, micromanaging centres with endlessly capacity to piss off folk who think "that's so not me and not my concerns".

Notice that the most ideologically conformist and distant-from-the-centre industries--as usefully measured by political donations--in the US are also the ones supposed to reflect society back to itself (and have, due to said conformity and distant, doing an increasingly bad job at it).
http://www.businessinsider.com.au/charts-show-the-political-bias-of-each-profession-2014-11

Lorenzo from Oz writes:

Have a long comment stuck in approval because I had two links. I agree that peace promotes smaller entities, don't agree that globalisation does.

[The comment is posted now. The hold-up had nothing to do with your having two links. You used several words that are flagged for moderation as potential foul language.--Econlib Ed.]

John Alcorn writes:

Alberto Alesina, Enrico Spolaore, and Romain Wacziarg are leading economists who have built on David Friedman's seminal article. (See comments by Fralupo and Lorenzo of Oz.) Alesina and Spolaore wrote a short update of their ideas a year ago, "What's Happening to the Number and Size of Nations." Therein they write:

when we look back at the trends of the past few decades, and project such trends into the near future, we expect that demand for autonomy and independence will remain high, as long as the world continues to be democratic, peaceful and open.
If doubts about the survival of the EU and Nato are equivalent to doubts about prospects for peace and openness, and if the economic explanation of the number and size of nations is correct, then the answer to Prof. Sumner's question would be, Yes, Scotland and Catalonia are less likely to seek independence.

However, matters are more complicated. For example, voters who support Brexit are divided. Many want less openness, but others want more openness than the EU allows. Many would like the EU to dissolve, but count on NATO. Moreover, political psychology is more complicated than political economy. Although statistics support the Alesina-Spolaore account of the number and size of nations, I hesitate to apply the theory to predict the outcome of a specific nationalist movement.
Indeed, I will not be surprised if, paradoxically, Catalonia or Scotland secede from Spain or the UK, not despite but because of growing doubts about peace and openness.

Jose writes:

Mathias, Prof. Sumner, the 19th century nationalism reduced the number of countries, that is true, but it also created conditions that led to the large scale wars of the 20th century. Since WWII, most conflicts are secessionists, or have economic interests behind it.

mike davis writes:

A small country may not necessarily be a militarily weak country. To fight a war you have to overcome a serious free-rider problem. To the extent that small countries are made up of a more homogenous population in which it is simple to observe the contributions citizens are making to the war effort, it is easier to fight. Good examples include Finland in WWII and Israel since it’s founding.

I wonder, though, whether those small countries that are good at fighting wars will be more aggressive than would otherwise be the case. Even if a small country is really good at beating up others, they would have a hard time achieving a meaningful conquest of a large country--Finland was never going to conquer Russia. Conquering another small country might be possible, but doing so creates a less homogenous, and hence a less defensible, land. Even if Israel could conquer Egypt, doing so would undermine the whole idea of the Jewish State.

bill writes:

Related: In my opinion, independence referendums should require super-majorities. People shouldn't be making long term, difficult-to-reverse, changes based on 52% to 48% votes.

Aaron writes:

@bill,

I think there were a number of these things that were passed on scant majorities in at least some of the member states. Especially the Maastricht treaty creating among other things, the common currency. You are probably right that such sweeping changes shouldn't be made on such slim margins, but if that were the approach, the EU would probably be a different (and smaller) thing than it has turned into.

Viking writes:

@bill

Would you also demand that referenda towards less independence should require a super-majority?

Regarding the list of possible new countries, it seems pretty broad, in the sense that populations of possible new states vary by more than a factor of ten. Abkhazia with 200K population is quite different from Catalonia with 7.5 million people. There are many examples of smaller countries piggybacking on friendly or not so friendly neighbors. Monaco/France, Lichtenstein/Switzerland, Greenland/Denmark, HK & Macao/China, Costa Rica/USA, Vatican/Italy. The list of ten is a mix of countries that do and don't have the necessary size needed for the economics of scale. Costa Rica is pretty independent, but doesn't have an army.

mbka writes:

Scott,

Do doubts about the survival of the EU and NATO make places like Scotland and Catalonia less likely to seek independence?

Or conversely, would Catalonian and Scot independence (while remaining in the EU) make the EU more stable, precisely because small countries depend on access to free trade across their border much more so than large countries do? E.g., the US can make do with restriced international trade much easier than does Singapore.

Lorenzo from Oz writes:

John Alcorn -- useful links, ta!

Ally writes:

Scott,

As a Scot, I would say that doubts about the survival of the EU and NATO would make Scotland less likely to seek independence.

Scotland is generally one of the most pro-EU parts of the UK, as demonstrated in last years referendum, where 62% of the Scottish electorate voted to remain in the EU (the highest proportion of 'remain' voters in any of the UKs 12 EU 'regions', compared to 48% of the total UK electorate. With the latest polling suggesting that public opinion hasn't shifted since.

The SNP's (Scottish National Party - the pro-Scottish independence party) official position is they desire for an Scotland independent from the rest of the UK, but within the EU.

Doubts about the continued survival of the EU makes independence a riskier prospect than it already is for Scotland, and thus, in my view, makes it less likely.

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