Economic non-viability of small countries

Questionable trade viability of small countries
Economically disadvantaged countries

Nature

Modern production methods, particularly in industry, are usually characterized by the important economies of scale they yield. The larger the domestic market for goods, the more likely efficiencies of scale will be realized.

Background

The economic non-viability of small countries emerged as a recognized global concern in the mid-20th century, particularly following decolonization and the proliferation of microstates. International organizations and economists began documenting persistent challenges such as limited domestic markets, vulnerability to external shocks, and high per capita administrative costs. Subsequent studies and UN reports throughout the 1970s and 1980s deepened understanding of these structural disadvantages, prompting ongoing debate about sustainable development strategies for small nations.

Incidence

Over 50 developing countries have a population of less than 5 million, and about 80% of the developing countries have less than 15 million inhabitants. The level of purchasing power, even in countries with larger populations, is often below that of small European countries. Thus, with respect to a very large number of productive activities, the domestic markets of the vast majority of developing countries are not large enough to enable them to benefit from the cost-reducing advantages of large-scale production methods. As a result, numerous industries are operating below capacity. Costs of production are driven up, and the parallel development of similar industries in each country of a particular region leads to a waste of resources that can amount, in several technologically advanced sectors, to some thousand millions of dollars in a particular continent. Often the size of the market simply precludes developing countries from entering new lines of production, thus impeding introduction or continuation of the import substitution process.

Claim

The economic non-viability of small countries is a critical global issue that cannot be ignored. Limited resources, tiny domestic markets, and vulnerability to external shocks leave these nations perpetually disadvantaged. Their struggle to achieve sustainable growth and provide for their citizens undermines global stability and prosperity. Addressing this problem is not just a matter of fairness—it is essential for a more equitable and resilient world economy. Ignoring it is both short-sighted and irresponsible.

Counter-claim

The so-called "economic non-viability of small countries" is a manufactured concern, not a genuine problem. Many small nations thrive, leveraging agility, innovation, and niche markets. Globalization and technology have leveled the playing field, making size irrelevant. Obsessing over economic scale distracts from real issues like governance and education. Small countries can—and do—prosper; their success depends on smart policies, not arbitrary notions of viability. This topic is simply not worth our worry.