Why So Many Mice Are Roaring

In this 1994 Businessweek article, Nobel Prize winner Gary S. Becker argues, following Robert J. Barro, that “small is beautiful”

Why so many mice are roaring

The number of nations has almost doubled in the past 50 years, to 191 independent states. The usual explanations for this multiplication, which invoke nationalism and ethnic conflicts, overlook a major reason: The economic cost of independence has been sharply lowered by the rapid growth in post-World War II international trade.

Since 1950, world imports and exports have grown at the remarkable rate of about 10% a year. Even during the economic slowdown of the 1980s, international trade continued to expand at 5% a year. The result has been that prosperity no longer depends on a large domestic economy--even tiny nations can hawk their wares in the world market.

In fact, small nations now have advantages in the competition for international markets. Economic efficiency requires them to concentrate on only a few products and services, so they often specialize in niches that are too small for large nations to fill. Because small economies are more homogeneous, they tend to suffer less from internal clashes among special interests. Their goods and services tend to be less exposed to trade quotas and other restrictions, since they don't amount to enough to affect producers in large countries. Similarly, economic alliances such as the European Union are usually willing to accept a smaller nation as a member since its production would not pose much of a competitive threat [...]

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