A few comments.
Being small has some disadvantages in international negotiations, but mainly small countries slip through the cracks of various barriers and obstacles.
The WTO and monetary unions among small nations certainly is often part of the explanations why being small is not as disadvantageous as in the past, and has certain advantages.
True, a homogeneous culture may help a nation integrate, but countries splitup typically because the cultures are different and sometimes clash. Examples include Yugoslavia, the Serbs and Czechs in the former Czechoslovakia, Ukraine and Russia, and so forth. Splitting up enables them to engage in trade and movement of capital and people without cultural, religious, or ethnic clashes getting in the way.
I will stick by my analysis of East and West Germany. If they had stayed independent, wages would have fallen in the East. Of course, some young people would have moved to the West-they do anyway! But new companies would have started attracted by the low wages, and these wages would also have attracted companies from other nations, especially West Germany, if the labor environment more generally was attractive. To be sure, the 1-1 exchange of currencies was politically necessary, given integration, but isn’t this political necessity another reason why integration was a bad idea from an economic viewpoint?
International trade grew partly because of the growth in nations, and partly because trade increased between nations. But as you realize, the large growth in U.S. exports and imports is an indication of the general growth in international trade. This is one of the important factors that made small nations more viable economically.
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04/22/2005
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