Abstract

One noticeable trend in the post-World War II period has been the increase in the number of countries in the world. At the end of the war there were about 100 countries in the UN, and 50 years later the number is almost double that. Many of these countries have populations of 15 to 10 million or less, and so they can be characterized as small. The reason for the increase in the number of countries in the world immediately after World War II was the process of decolonization. In more recent times, new states emerged as a result of the disintegration of multinational countries (former USSR, Yugoslavia, Czechoslovakia). While the dismemberment of multiethnic states is partly a political process, it also raises many economic issues. One of them is whether these small countries can be viable as a polity or, more importantly, as economies. A major concern in this case is that they will not be able to participate effectively in the world economy. If such a country is not competitive in world markets, such a separation will only lead to a reduction in per capita income, not only in them but also in the countries from which they have separated. In addition, there could be other negative externalities, the consequences of which would be borne mostly by large or medium-sized countries.