The Incredible Shrinking State

The effects of economies of scale in government, trade openness, preference heterogeneity, and regime type are used to explain why the average size of states within the international system nearly doubled between 1816 and 1876 and then contracted over the 20th century. No one variable appears to explain the trend fully. Results suggest that the rise in territorial size during the 19th century is the product of a growing number of federal democracies, which tend to be large, and that the decline in average size during the 20th century is the result of a growing number of unitary democracies, which tend to be small. Increasing economies of scale in the 19th century may have led to the rise of large federal democracies, whereas economic liberalism may have allowed unitary democracies to prosper in the 20th century.