This column is written by Maritza Cabezas Ludena, shared by Triodos.
Traditionally, large economies, because of their systemic importance, have more influence in international fora. The largest emerging markets, Brazil, Russia, India and China (BRICs) are part of the G-20, the main forum for global and economic cooperation. Additionally, these same four economies are among the ten largest shareholders in the IMF and World Bank. Voting power in multilateral financial organisations is determined by quotas, also linked largely to a country’s GDP. But at times, the search for global leadership can be costly for large countries. The largest emerging economies pay a high political and economic price in cementing their global leadership, in the areas of defense, trade and technology.
Surprisingly though, there seems to be little evidence pointing to the benefits of large country size when bouncing out of a crisis. Country size, measured by population, GDP and arable land, shows that scale does not per se guarantee resilience, or the adaptability needed after a crisis to rebound and transform a country to the benefit of its population. Strong institutions and good governance are only some examples that, more than size, enable this adaptability. And other studies show that population-size alone has no relationship with well-being, while other factors including economic openness fare better. These results at a first glance seem counterintuitive if we consider the benefits of economies of scale and a large internal market, which should favour competition and specialisation.
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