Survivor: Is There an Optimal Country Size?

John A. Conybeare, University of Iowa

Abstract

Contemporary manifestations of international integration and national disintegration have stimulated speculation on the optimal size of a country. Economic theories focus on efficient resource allocation, and empirical work on partial equilibrium tests correlating size with variables (limited by data availability to recent times) selected from theoretical models of optimal size. This article questions the assumption that there is an optimal size, offering a test using data covering 500 years. The existence of an optimum, determined by efficiency or other goals, will be revealed by a size category generating an increasing proportion of world income, as more states move into that category. The results of this “survivor” test do not indicate the emergence of an optimal country size, despite data limitations that prevent cross-sectional analysis over a long time period. The absence of evolution toward optimal size suggests alternative directions in the research on country size.