統合と分離 “国の規模 the Size of Nations” は 重要か

1. 統合と分離“国の規模　the Size of Nations”は重要か リージョナルアナトミー論F 第2週[10月5日]

2. 国の最適規模 費用、便益 N K 領域の規模

4. 領域の平均規模1815-1995年（10年単位） 総体 新興 消滅

5. 国の平均規模（地域別、単位：千平方ｷﾛﾒｰﾄﾙ）国の平均規模（地域別、単位：千平方ｷﾛﾒｰﾄﾙ）

6. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • Among the richest countries in the world are both some of the smallest and some of the biggest. The same is true for nations struggling with poverty. What are the factors that enable nations as large as the United States or as small as Norway to achieve economic success and political stability? VOA’s Zlatica Hoke discussed the question with economic analysts and has this report.

7. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • Enrico Spolaore and his colleague Alberto Alesina, professor of economics at Harvard University, explore the optimal population size in a book titled “The Size of Nations.” • Norway has only 4,5 million people, but one of the world's highest GDP's per head. Norway has only about four and one half million people, fewer than many large American cities. But the purchasing power of its citizens widely outpaces giants such as China, India, Brazil and Indonesia. • Clearly, says Enrico Spolaore, professor of economics at Brown University, success is determined by something more than a country's population size: “The size of the nations alone does not seem to explain whether you would do well or you would not do well economically.”

8. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • Alberto Alesina “And the point of view that we take," says Professor Alesina, "is that there is a trade-off between the benefit of being large and the cost of being large. And the benefit of being large comes from economies of scale: cost of defense, ability to do the distribution within the country and the cost emerged from the fact that a large country has a lot of diverse individuals with diverse preferences.”

9. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • Large countries can have proportionately smaller governments and defense systems, even though they often choose not to. Armies, roads, embassies and many other costs of running a country impose smaller costs per person in populous countries. Large countries also have large internal markets for their goods. But size has its costs. Large countries are likely to have diverse populations whose conflicting preferences may be hard to meet. • Attempts by many ethnic minorities – Chechens in Russia, Albanians in Kosovo, Acehnese in Indonesia and many others – to break away from their countries, say the authors, point to people’s preference to live in smaller, homogeneous communities. And ethnic conflicts are costly, both in terms of economy and in terms of the loss of human lives.

10. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • The authors of “The Size of Nations” say a big country has certain advantages in a hostile world. For centuries, as an example, China was able to keep the outside world at bay. But at a cost, says professor Spolaore: “If you look at what happened in the past one thousand years in China, you can see that China was ahead in terms of technology and culture and the economy for long periods. • But than at some point, because it was such a large country with a very large and almost self-sufficient society, at different points in time historically, China decided that they could close down completely from the rest of the world.”

11. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • China's Great Wall kept its people isolated for centuries. When China ceased its naval explorations during the 15th century, says professor Spolaore, it missed the opportunities for development that Europe had. Its development also slowed down during the Communist era of isolation. • But when it opened its borders to international trade and business a decade or so ago, its economy began to grow at a fast pace. Small countries do even worse in isolation, says Professor Spolaore. He says Albania under post-World-War-Two despot Enver Hoxha is the best example: “Being such a small country, it was in the worst possible situation: small openness and small size. That’s the worst situation you can be in – if you are small and if you are closed.”

12. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • Professor Spolaore says now that Albania has opened its borders, internal strife and corruption are stifling its progress. • “Conflict is a very important variable in the picture," he says. "And in fact, this is a cost that you could have from having many different groups or many different sides in a country fighting with each other.”

13. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • Professors Spolaore and Alesina say in the past half century, as some of the old political empires have disintegrated, new and much smaller countries were formed. At the same time there have been few mergers: North and South Yemen and the two Germanies. After the initial shock of transition, many of these countries are beginning to see growth. • In addition to that, says professor Spolaore, other small countries that have embraced a free-market economy, such as Malta, New Zealand and Singapore have done exceedingly well.

14. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • “Economically Singapore had the highest growth rate between 1960 and 1990 – the highest growth rate in the world," notes Professor Spolaore. "So the highest increase in income per capita in the world was in Singapore that is a relatively small country. Now it has about four million people. It’s still below the average size of a country. Most countries in the world are smaller than five or six million people.”

15. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • Despite progress, poverty is still a problem in India. Calcutta is known for its slums and street dwellers. So Professor Spolaore says the trend to form smaller, more homogeneous countries will continue. • But judging by the United States, the country with the world’s largest economy and second largest gross domestic product per head, large multi-ethnic nations can obviously also prosper.

16. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • Professor Alesina says this is because the United States system is decentralized: “Often non-American observers don’t realize how much economy the local government and state governments have in the U-S and how different it is to live, say, in Vermont or in Texas. There are a lot of policies which are decided locally, from education policy, to welfare, to tax. In other words, if the United States was run the same way as France, where everything is decided in Paris, it would not work.”

17. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • But many economists say size and homogeneity have no effect on economic prosperity. Ian Vasquez, director of the project on global economic liberty at the Cato Institute, says: “Basically what makes a difference for a country’s prosperity is its level of economic freedom. We know that there is a very strong relationship between economic freedom and prosperity. The countries that are the most economically free also tend to be the most prosperous and tend to grow more than countries that are far more closed. And indeed the countries that top the list are also countries that are more open than the rest of the world.”

18. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • Ian Vasquez A free-market economy alone cannot guarantee prosperity either, says Mr. Vasquez: “Countries should maintain a disciplined monetary policy. They should allow their citizens the freedom to exchange property rights. So, the freedom of choice the freedom to exchange, the rule of law and property rights are all important. And it is not coincidence that those are all well protected in the countries that top the list.”

19. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper • The authors of “The Size of Nations” conclude that given the choice, most people would prefer to live in small homogeneous nations. But those that are successful strive for economic if not political integration.

20. Voice of America：With Free Markets, Nations as Small as Luxembourg and as Large as the US Can Prosper

21. Integration and secession- the size of nations- • The recent break up of nations in Middle and Eastern Europe motivated some of the Cambridge economists to turn their attention to an understanding of the factors determining the size of nations, indeed a truly political economy problem. • Major articles are by Alesina and Spolaore (1997), Bolton and Roland (1997), Alesina and Wacziarg (1998), Alesina, Spolaore and Wacziarg (2000, 2003), Alesina and La Ferrara (2003).

22. Integration and secession- the size of nations- The authors focus on the factors favouring the emergence of politically integrated large states compared to a diversity of smaller states and vice versa. Based on their study of the literature and on various models they derive some key trade-offs:

23. Integration and secession- the size of nations- • Heterogeneity of preferences and of skills of individuals has two opposing effects on the size of a state. On the one hand heterogeneity is a source of creativity promoting production and supply of private goods. To fully exploit these benefits, markets should be large, and the size of states should follow the extension of markets.（注2） 注2 Limits to country size are given by differences in languages, culture, business practices, legal systems, etc. (Alesina, Spolaore and Wacziarg, 2000, p. 1284) On the other hand large states encompass heterogeneous populations for whom it is difficult to reach collective decisions on public goods. Therefore small states with more homogenous populations might be desirable. Hence public goods limit the size of nations.

24. Integration and secession- the size of nations- 2. Taken together heterogeneity establishes a trade off between the size of a state (as a function of public good demand) and the size of the market. If citizens want to have large markets, they have to make compromises in public goods. Peripheral citizens [in terms of Hotelling’s spatial model (Hotelling 1929)] will largely feel in disequilibrium with the amounts of public goods imposed on them.

25. Integration and secession- the size of nations- • 3. This disadvantage may, however, be overcome if a regime of free international trade can be established. Large markets become feasible without the need of having large states. Therefore previous large nations tend to break up when free trade becomes feasible and public good provision can be better adjusted to peripheral citizens. If however external free trade is not feasible, integration into large nations can be seen as a substitute as it enables internal free trade.

26. To sum up: • large states are advantageous for private good provision while small states are better able to satisfy individual preferences in providing public goods. Free trade enables access to large markets even for small states. Therefore free trade leads to separation. 注3 The models presented e.g. in Alesina, Spolaore and Wacziarg (2000, 2003) encompass some more variables such as scale economies and economic growth. But the basic point which the authors want to emphasize seems to be reasonably well characterized by items 1-3 above.

27. Free trade as an exogenous variable for integration and secession? • The trade regime, from this point of view, is an exogenous variable explaining the integration or disintegration of nations. Free trade should promote disintegration while protectionism, vice versa, should explain political integration of nations.4 注4 In the words of the authors: „More specifically, this paper pursues two goals: Firstly, we develop an explicit model of geography and trade which endogenously derives equilibrium number and size of of countries as a function of the trade regime. Secondly, we provide empirical evidence for two critical implications of the model: (i) the effect of country size on economic growth is mediated by the degree of openness; (ii) the long-term history of country formation and separation has been influenced by the pattern of trade openness and economic integration and vice versa. In particular, we emphasize a trade-off between the economic benefits of size, which are a function of the trade regime, and the costs of heterogeneity resulting from large and diverse populations.“ (Alesina, Spolaore and Wacziarg, 2000, p. 1278)

28. Free trade as an exogenous variable for integration and secession? • The statistical records presented by the authors are, however, weak. Alesina, Spolaore and Wacziarg (2000, p. 1292, fig. 5, and 2003) emphasize four periods characterized by an integration of smaller into larger countries or vice versa of a disintegration of larger into smaller countries:

29. Free trade as an exogenous variable for integration and secession? • (a) the integration of 18 sovereign German states into the German empire in 1871, • (b) the disintegration in Europe following World War I, • (c) the disintegration due to decolonialization in the 1940ies and 1950ies • and (d) the disintegration of the Soviet Union and its satellites around 1990.

30. Free trade as an exogenous variable for integration and secession? • But these examples, to which more can be added, do barely correspond to the theory of the authors. • We can distinguish cases of vague consistencies and cases of inconsistencies: • Vaguely consistent with the theory of Alesina et al. are the cases c and d in the sense that disintegration took place as free trade became feasible. But it remains open why the break up of the colonial states took place right after World War II（注5）while the break up of the Soviet Union and its satellites came forty years later（注6）. 注5 Free trade was promoted by GATT founded in 1947, see below. 注6 Obviously, military power of the Soviet Union and the cold war made earlier liberalization impossible. The influence of war and peace is recognized in Alesina and La Ferrara (2003). Therefore the free trade variable could be replaced by the variable of peace versus an impending international conflict. Our critique on the exogenous nature of the trade variable (see below) is simply shifted to the war/peace variable.

31. Free trade as an exogenous variable for integration and secession? • Inconsistent with Alesina et al. are the cases a and b as well as some related cases of the recent history: - German integration of 1871 (case a) was obviously not caused by protectionism. On the contrary, it was preceded by long periods of increasing free trade which was institutionalized in the German Customs Association of 1828-1919 and the North German Confederation of 1867. The facts were contrary to the authors’ theory. Free trade has led to political integration and not to disintegration7 7 It is true that political integration of 1871 was followed by a period of protectionism, but not earlier than 1877. Integration of 1871 still took place in the spirit of free trade, and it is hard to argue that protectionism of 1877 sq. was anticipated by unification of 1871.

32. Free trade as an exogenous variable for integration and secession? • The establishment of the European Economic Community in 1958 started as a free trade association because a political union was not yet feasible, but the intention was directed at attaining a political integration with free trade as an intermediary stage only. Again, free trade, not protectionism was the source of integration. • The European Free Trade Association EFTA which was founded in 1960 and aimed at establishing free trade in order to merge into the European Union at a later date. • Political disintegration in the aftermath of World War I was neither antecedent nor followed by free trade. Protectionism prevailed before and thereafter.

33. Summing up the empirical evidence discussed, • we observe three findings contradicting basic tenets of the Cambridge School approach: • integration does not necessarily follow from a lack of external free trade; • external free trade might lead to integration; • separation does not necessarily follow from free trade.

34. Free trade as an exogenous variable for integration and secession? • Why is the empirical evidence for theories of Alesina et al. so weak? The reason is that a theory of free trade is missing. Free trade does not “fall from heaven”. It is not exogenous but the result of human action. But human beings evaluating pros and cons and taking autonomous decisions do not exist in the model of Alesina et al. The smallest decision unit is a “country” as can be seen in the model by Alesina, Spolaore and Wacziarg (2000): • “The world is composed of W “economic units” (in short “units”), which are the basic entities carrying out economic activities. These units are not geographically mobile. They can be interpreted as homogeneous regions, themselves composed of one or more identical and geographically immobile individuals.” (Alesina, Spolaore and Wacziarg, 2000, p. 1279).

35. Free trade as an exogenous variable for integration and secession? • Obviously, countries cannot be the unit of analysis. Countries can generate neither free trade nor protectionism. Therefore Virginia school economists prefer to analyze the behavior of individuals and their ability to influence policy through interest groups. They suppose that the trade regime is dependent on the power of interest groups. • If interest groups are powerful, neither free trade nor integration will be politically feasible. For interest groups would be hurt by internal free trade within a political union as well as by external free trade. On the other hand, when interest groups are weak (or can be reconciled, see below), free trade as well as a political union aimed at internal free trade may be feasible. Consequently the relevant trade-off lies in between free-trade – may it be internally within large states or externally among states – and protectionism as a function of interest group power. (see e.g. Frey 1985, Grossmann/ Helpman 1994)

36. Free trade as an exogenous variable for integration and secession? • It remains to be explained what makes interest groups strong or weak. This is a question to which the late Mancur Olson has given some answers in his book The Rise and Decline of Nations 1982. His main hypothesis is that interest groups are the stronger the older are the institutions of the state considered. For a more in depth analysis we refer to the literature. • Empirically the General Agreement on Tariffs and Trade (GATT) - the later World trade Organization (WTO) - which was established in 1947, supports the interest group approach to free trade. The success of GATT was built on it ability to compensate domestic interest groups as potential losers of free trade by multilateral reciprocity. The narrow scope of bilateral trade negotiations was overcome by negotiating multilaterally, and there is more scope for interest groups to agree to reducing protection8. • 8 GATT was a pathbreaking institutional innovation, which was not available before. Insofar it is an exogenous variable. But it shows to which goal our endeavour should be directed: towards improving the incentives to provide more mutually acceptable institutional innovations.

37. Free trade as an exogenous variable for integration and secession? • If interest group activity is a relevant factor determining the trade regime, predictions on protectionism or free trade are likely to be rather different from those of the Cambridge school. If anything can be said, it might be the following: • Strong interest groups are leading to protectionism and eventually political disintegration as the amount of protection that can be produced for a particular producer is likely to increase with the number of customs lines. One example is the German Holy Roman Empire that counted about 320 autonomous states or territories each with different customs rules from about 1648 to 1806.9 • 9 Free trade oriented city states were rather the exception than the rule. • If interest groups can be reconciled and free trade is possible, this may lead to political disintegration (as e.g. in the case of former Czechoslovakia) or to political integration (as e.g. within the European Union). • Though these predictions are certainly not the last word, we hope to have made clear that a sound theory of protection or free trade has to be based on individual action within interest groups and not on the behavior of organic collectives such as regions or states.

38. The Size of Nations Alesina, Alberto And Enrico Spolaore Cambridge, Massachusetts: The MIT Press 2003

39. Contents • Introduction • Overlapping Jurisdictions and the State • Voting on Borders • Transfers • Leviathans and the Size of Nations • Openness, Economic Integration, and the Size of Nations • Conflict and the Size of Nations • War, Peace, and the Size of Nations • Federalism and Decentralization • Size and Economic Performance • The Size of Nations: A Historical Overview • The European Union • Conclusions

40. 12 The European Union • Introduction • What Should Europe Do? • What Does the European Union Do? • Union, Countries, and Regions • Conclusion

41. 12.1 Introduction • Fifteen European countries have created supranational institutions – including a parliament, a court system, a commission, and a council of ministers – to which they have delegated substantial policy prerogatives. How does the European Union fit in our model? The trade-off between economies scale and heterogeneity of preferences that underlies our analysis offers a useful insight into the process of European integration.

42. 12.1 Introduction (2) • European integration started in the 1950s when security considerations were an important factor. The idea was that deepening economic cooperation, especially in the strategically important areas of coal and steel, was a way of preventing devastating intra-European conflicts. In subsequent decades, with the increase in economic integration, trade barriers were removed. In 1992 a second phase of integration was started by the creation of a single European market. A significant step in the 1990s was the introduction of a single currency now adopted in twelve of the fifteen countries.

43. 12.1 Introduction (3) • For a decade now, European integration seems to have gone beyond its goal of enforcing peace and security and a common market. European institutions have obtained, in many aspects of public life, attributions that usually are the domain of national governments. Table 12.1, from Alesina and Wacziang (1999) shows that these European institutions are involved in many policy areas, although at different levels in these areas. In order to carry out all of these tasks, Europe has set up some novel institutions. Europe has a parliament that is much less powerful than a national parliament but can, in principle, become the center of legislative production for all its member states. Europe has a council of ministers that is both the executive arm of the Union and a deliberative body.

44. Table 12.1

45. Table 12.1 (continued) Sources: Nugent (1994, ch. 10), and Europa Web site (official Web site of the EU), Reprinted from Alesina and Wacziang (1999).

46. 12.1 Introduction (4) • The European Commission is becoming more like a central government. The recent extension of majority voting, as opposed to unanimity, in the council of ministers has increased the legislative role of this institution. Finally, the European court has been active in interpreting and enforcing European legislation.

47. 12.1 Introduction (5) • How do we interpret this process? First, let us be clear that Europe is not a “state” (not even a federal state) in the way we have defined it, following Max Weber: the European Union does not have the monopoly of legitimate coercion over its citizen, and it is extremely unlikely that the member states (especially in an enlarged Europe) will ever relinquish it. Then the question is, What is the European Union if not a state? To some extent the Europe is a union of states that serves the purpose of taking advantage of economies of scale, and creating a level of government with limited prerogatives were benefits of scale are large and heterogeneity of preferences low.

48. 12.1 Introduction (6) • The principle of subsidiarity that should be the basis of European integration is consistent with this interpretation, and also consistent with our analysis. This principle states the following: • “In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarities, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community” (Article 3b, Treaty Establishing the European Community, Maastricht, 1991)

49. 12.1 Introduction (7) • In spirit, by this principle European-level institutions should only operate in areas where economies of scale and externalities make it inefficient for national government to operate independently. Areas like defense against foreign aggression, free trade, the environment, and antitrust are natural policy areas where economies of scale and externalities call for supranational institutions. The trade-off between economies of scale and heterogeneity of preferences that underlies our model offers a suitable interpretation of European integration, if the latter is viewed as an application of this principle of subsidiarity. The subsidiarity principle is, at least on paper, consistent wih our model of the trade-off between economies of scale and heterogeneity of preferences.

50. 12.1 Introduction (8) • However, as emphasized by many observers, and especially by Alesina, Angeloni, and Schuknecht (2001), European-level institutions are involved in areas where economies of scale are far from obvious and heterogeneity of preferences among European citizens are high. Thus the principle of subsidiarity cannot be applied consistently. Indeed, as Europe has moved toward integration, the process has been stalled by British reluctance, repeated Danish rejections of European treaties, a recent Irish rejection of the Treaty of Nice, and a general feeling that European citizens are less enthusiastic than their leaders about further coordination and uniformities of policies.