Happy Birthday, Montenegro

If all goes according to plan, Montenegro will soon separate from the state of Serbia and Montenegro and become a sovereign state.  With this act, Montenegro will become the 193rd or 194th or 195th state, depending on how one defines a state.  For more precision, we can say that Montenegro will be the 192nd member of the United Nations when it takes its seat.  (Taiwan is a state but is not formally recognized as such, and is not a member of the United Nations; there are a few other ambiguous cases.)

 

         As a recent post by Saul Levmore noted, the number of states has increased rapidly since World War Two.  The graph below provides some data.

 

Most of the increase can be attributed to decolonization of large areas of Africa and Asia, the breakup of the Soviet Union, and the breakup of Yugoslavia.  Also important are the division of Czechoslovakia into the Czech and Slovak republics (1993), the secession of Eritrea from Ethiopia (1993), and the secession of East Timor from Indonesia (2002).  In the opposite direction, many European states are partially merging into the EU, but this seems to be a localized and special situation.  Prior to World War II, the number of states increased with the collapse of the Ottoman, Russian, German, and Austro-Hungarian empires at the end of World War I.  Prior to World War I, the trend was in the other direction.  The number of states declined in the nineteenth century when German states merged to form Germany and Italian states merged to form Italy.

            The unreflective response to these developments is one of approval.  Observers   living elsewhere instinctively think that when a group of people want to secede and start a new nation state, they should be permitted to do so.  But this instinct is probably not right.  The first and obvious point is that 45 percent of the population of Montenegro voted against independence.  Should these 45 percent be permitted to declare independence as well?  People living in the Serbian region of Serbia and Montenegro could not vote on whether their country would be divided, though they would obviously be affected by the division, and don’t seem too happy about it.  There is no obvious or simple criterion for determining the optimal size, shape, or location of a state, and who should decide.

            What explains the trend toward more and smaller states?  The economists Alberto Alesina and Enrico Spolaore argue that greater trade openness since World War Two is the cause of the increasing number of states.  As trade barriers decline, the gains from having a large internal market fall; the populations of small states can exploit economies from the division of labor as well as the populations of large states can.  Alesina and Spolaore also suggest that democratization may play a role in the increasing number of states.  Dictators  may prefer large states so that they have a larger population to exploit; democracies rely to a much greater degree on popular consent.  But trade openness and the type of political regime are themselves the result of choices by governments of powerful states such as the U.S., which has pressured other states to reduce trade barriers and adopt democratic forms.  One wonders whether the U.S. and its allies have been pursuing policies that made sense in the short term but in the long term will result in political fragmentation that will make the world harder to manage.

            To see why this might be a problem, imagine some global collective action problem—overexploitation of a fishery, the spread of infectious diseases across borders, smuggling of drugs and weapons, the collapse of states which become refuges for terrorists. Surely such problems can be handled more effective by a small number of states than a large number of states. As states shrink, spillovers increase, decisonmakers multiply, and thus global collective action becomes more difficult.  Separatist movements in Spain, Italy, Canada, Russia, Serbia, Mexico, and many other places, will draw inspiration from Montenegro’s success.  It’s not clear that the rest of the world can do anything about this, but on the margin it may be better for it to be discouraging rather than encouraging.

Comments

[Roach]

The trend towards uni-national states which contain ethnic minorities as opposed to multiethnic, multinational empires has probably been one of the principal causes of war in the 20th Century. Alleged mistreatments of minorities in neighboring states has been one of the chief pretexts of military campaigns, whether between Poland and Lithuania, Poland and Germany, Germany and the Czech Republic, Greece and Turkey, the various Balkan states etc. And it is inevitable that minorities will be treated (or perceive themselves to be treated) shabbily and thereby inflame neighboring states where the minority is in the majority. Yet nationalism remains a potent force; nations want to express their identity and power and prestige with national states, free from minority status within other, larger political units.

I agree with you that this process should probably be more discouraged than encouraged. What will happen, for example, if every ethnic minority in Russia were to try to secede. We've seen already in Chechnya that remaining ethnic Russians will be mistreated and nations will rightly resist their division in smaller units, one by one, from agitating internal minorities. Further, the trend towards uni-national states goes against the other major phenomenon of modern times: mass immigration and ethnic diversity within large nations. Perhaps this latter trend is unsustainable, but it is ironic that the west which has pursued this strategy internally will defy its own logic and insist that other nations must each govern themselves separate from the challenge of living with one or more ethnic groups in a single polity.

[Farok J. Contractor (Rutgers)]

1) Can someone kindly give the source for the graph of Number of States by Year?

2) I have wandered into this blog because of my interest in the question of MES (at the plant level) in different sectors vis-a-vis nation size. Can one make a generalization about the need for companies to become multinational, based on scale economies at the plant level. That is to say plant size versus national market size?