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Foreign Policy Analysis
Why are SMALL countries RICHER? – VisualPolitik EN

Why are SMALL countries RICHER? – VisualPolitik EN

Which are better, large or small countries? Which are more successful? These questions may seem silly, but, my friends,
I guarantee you they are not. We live in a world that is gaining more and
more countries, so obviously, these are becoming smaller. Since 1950 our world has gone from having,
about 60 countries to almost 200. So, this may lead to a few questions. Is this good or bad? Are small countries viable? We will see the answers to these questions
in this video, but first, a comment. When we talk about small countries, we mean
countries with a population of fewer than 10 million inhabitants; this includes Hong
Kong and Macao, because, even though they’re part of China, they have their own laws, courts,
customs, etc. But, having said that… let’s proceed to
the key issue, what is happening with these small countries. And, this is a very important issue in international
politics. We all know, that a good part of political
conflicts have a lot to do precisely with this… with many territories wanting to declare
themselves independent and become new countries. Some examples are Scotland, Catalonia or Kurdistan. (STRENGTH IN THE SMALL)
There’s no doubt, small countries don’t usually play a large role in international
news: they aren’t really taken into account in
major conflicts, they don’t participate in major decision-making processes and, truthfully,
their political news aren’t usually well-known. But this is all quite normal… We all know the President of the United States,
France or Russia, but who cares about the rulers of countries like Ireland, Denmark
or Taiwan? Yes, it’s true, in VISUALPOLITIK we tend to
talk about them, but, it’s not that frequent But, despite all this, the truth is that in
the last 30 years if something has characterized small countries, it has been that they do
things a lot better than large countries. In fact, every time a ranking is published
on the richest countries, or the most innovative, or the most competitive, the happiest or safest…
small countries almost always occupy most of the top positions. And yes, that’s when we realize that they
exist and we ask ourselves: how on earth do they do it? See, if we take, for example, the ranking
of the richest countries in the world, that is, the countries with the highest GDP per
capita, we’ll find that among the 10 richest countries, 9, I repeat, 9 are small countries. And, by the way, out of these 9 countries,
8 have less than 6 million inhabitants, that is, they are much smaller than cities such
as Dallas, Philadelphia or Toronto. But, if instead of taking the top 10, we choose
the top 25 countries, things change a bit… but… not much. Out of the top 25 richest countries in the
world, 17 are small countries. And, if we also take price differences into
account, that is if we take GDP per capita paired with purchasing power… then the information
is scandalous: In that case, the 14 richest territories in
the world are all small And, because we’re talking about very different
countries: Some have a high population density like Singapore,
and others a low one, like Finland. Some have many natural resources, like Qatar,
and others practically nothing, like Ireland; some are more agricultural… and others more
financial; some are large in territory and others very small. That is to say, there’s a huge variety…
but they all have one thing in common: they all have very few inhabitants. We’re talking about countries like Iceland,
New Zealand, Luxembourg, Norway, Ireland, Denmark, Singapore, Austria, Switzerland or
Finland, for example. And precisely, in 2014 and 2015, two studies
published by the Credit Suisse research unit corroborated this situation:
See, these studies found that small countries tend to be richer, more egalitarian and more
socially advanced. In fact, on average, they invest a lot more
in things like education or health. And that’s not all, if that weren’t enough,
small countries tend to have more lawful accounts, have less debt, less deficit, and even fewer
taxes. Even if we look at their financial markets,
or stock exchanges, for example, we will see that in the last decades small countries’
markets have had the best results. See:
So, I insist on a question that I am convinced many of you are asking yourselves. What is happening? How the hell do they do it? Well, let’s see. (THE KEY TO SUCCESS)
Why do small countries work better than larger ones? Aren’t big countries supposed to have larger
markets, more business opportunities and a greater ability to take advantage of scale
economies? What is failing? And no, I’m sorry, the cliché of tax havens…
isn’t included. Neither Finland, nor Austria, nor Denmark,
nor New Zealand, for example, can be considered, under any circumstances, as tax havens. So, what is the explanation? As we usually say here in VISUALPOLITIK, there’s
never a single cause, but we can say that these countries’ prosperity comes largely
from their own weakness. Just as you heard it. See, these small countries are more involved
in international trade, not only to sell but also, to buy the products they need. A small country can obviously not produce
everything. Also, they are more exposed to competition
and to the swings of the international financial markets. This forces them to be more prudent with their
accounts, to take care of their competitiveness and, of course, to not be able to afford the
implementation of protectionist policies. In fact, want another data point? See, 21 of the 25 most globalized countries,
that is countries that are more open to the movement of goods, people and capital, are
small countries. On the one hand, if we want to see how these
countries’ economy and company competitiveness work, we only need to take a look at for example,
the World Bank’s Doing Business index, which, as you know, classifies countries due to their
ease for doing business. The latest Doing Business 2018, which the
World Bank published on October 31st, 2017, is also dominated by small countries. New Zealand, Singapore, Denmark and Hong Kong
occupy 4 of the top 5 places. And among the top 25 countries in the world
for doing business, 16 are small countries. And there’s something even more important. See, small countries tend to have much less
bureaucracy: first because they don’t need so many political
structures, or it’s at least harder to justify them;
second, because citizens tend to be more aware of the costs involved;
and third because they simply cannot afford it. The result of all this is that small countries
tend to be more flexible, more competitive and less bureaucratic. Of course, some of you may be thinking, but
Simon, couldn’t small countries be richer because they were been created in richer zones
and territories? Well the truth is, no. There’s the case of Ireland or Singapore,
for example, which just a few decades ago were quite poor countries and are nowadays
two of the richest countries in the world. Another good example is the old republic of
In 1993 Czechoslovakia decided to divide into two smaller countries, the Czech Republic
and Slovakia. At that time, both countries, which used to
form Czechoslovakia, suffered the effects of the Soviet Union’s fall, and underwent
a severe transition; still the Czech side was much richer than the Slovak side. In fact, in Slovakia the per capita income
was only 65% of the Czech, unemployment rates were almost 5 times higher and the Slovak
region depended too much on the money that came as “interregional solidarity” from the
richest part of the country, that is, the Czech. Well, since they separated in 1993, both countries
have done quite well: They successfully transitioned from a communist
model to a capitalist model, and both have grown considerably more, for example, than
Germany. Now, out of the two countries, the one that
has progressed the most has been Slovakia. Yes. Being able to organize itself while having
to compete, favored the poorest. You can see the clear convergence that has
occurred between both countries in the following graph. We’ll explain everything in greater detail
in a next vídeo. But… before we’re done, one last note. (THE NEW WORLD CONFIGURATION)
Globalization has led countries with a large population to no longer have the upper hand. And not just that. The truth is that in this world, building
aspects such as competitiveness, openness and adaptability are becoming increasingly
important. And for the time being, my friends, small
countries seem to be more efficient on these issues. Small countries… and even cities. Yes, you heard me well. In our world, big cities have become the most
important economic growth drivers… This includes London and New York City, Hong
Kong, Singapore, Macao… cities that play an increasingly important role in our world. The economy of Jakarta, for example, grows
twice as much as Indonesia’s economy, New York’s GDP is twice that of Sweden, and the
countries that have the highest percentage of population living in cities tend to be
richer. So, I wonder: based on that information, shouldn’t
we bet on smaller, decentralized states or, even, give cities some independence? I leave it there. Of course, none of this compares to the influence
that the development of supranational organizations have to address many of the risks we face:
from terrorism to caring for the environment. But now it’s your turn: What do you think
is better, a world with several small countries or a world with a few large countries? Leave your answer in the comments as well
as in the survey. I really hope you enjoyed this video, please
hit like if you did and don’t forget to subscribe to our channel for brand new videos
every Monday and Thursday. Also, don’t forget to check out our friends
at the Reconsider Media Podcast – they provided the vocals in this episode that were not mine! And as always, thanks for watching!

100 comments on “Why are SMALL countries RICHER? – VisualPolitik EN

  1. A united world in which the global government addresses global issues, but where the day-to-day administration is done by the smallest possible divisions, the government should be as decentralised as possible, except for in matters which require the global community such as global warming, disaster relief, and fighting epidemics.

  2. Smaller countries only have a higher GDP per capita because the majority of their population lives in cities. Farmers may have a lower income, but they are essential to support cities. Decentralization benefits everyone as it better represents the civilians, but the issue is that nations must be large to compete with military strength. This is why alliances, Unions, republics, and confederations work. They have powerful militaries and are self-supported, yet they're politically separate and economically strong.

  3. Not true. Median wealth shows how poor these countries are. The uk and France beat all these countries easily. Median wealth is the mid point wealth of the average person. The state is rich as it taxes these countries like Denmark so heavily (it has the highest taxes in the world) leaving a poorer population that can only dream of the riches of London or Paris. However Switzerland is genuinely wealthy and has the highest median wealth on the continent of Europe. But quite a few of the others are not rich where it counts as in the average person.

  4. Let's just split Belgium already!

    Flanders, Wallonia and the city-state of Brussels. Each of them would prosper so much more if they were independent.

  5. He forgot to mention it's because they're also permitted to exist when, in truth, they would be much better off as part of a larger, domineering country. I mean, what right do they have to exist?

  6. Something don't add up… 65% of the countries in the world are small countries and a lot of rich countries are in europe which contains mainly small countries so statistically you just have more probability to find a country that is small and rich… So having 17 countries that are small and rich in the 25 most richest countries list is just maybe basic probabilities…

  7. of all top richest countries of the world, many are not real countries because they are parasitized on others..Hong Kong and Macau will be dead if China stop shipping water and groceries over, and if they resist then China just sends the army..end of story..Others are rich because of OIL, so the economies are asymmetrical and vulnerable to trade and embargo like qatar, norway, brunei etc…many are financial money laundering and/or tax heaven like monaco, luxembourg, lichtenstein…So the deserving mention of honors are bestowed on Switzerland and the USA..but like a household with 1 children versus 34 , it is much easier for the first to feed, clothe, educate the children than the latter…so the true honor should belong to the the way, 34 to 1 ratio is like the population of the USA in comparison to that of Switzerland.

  8. This is mostly true but not 100% true. Japan has smaller population than India, Pakistan, Bangladesh, Mexico, Brazil, Indonesia, Russia, and Nigeria for example and Japan is wealthier than all of these countries.

  9. Small countries do things a lot better…really? That must be news to El Salvador, Hunduras, Haiti, Jamaica, Albania and quite a few others.

  10. I think small countries are always better and there should be more of them – in fact, I think there should be 7.68+ billion "small countries" that co-operate voluntarily. What's right for me, may not be right for my neighbour and no man is fit to decide the fate of the other. Basic human rights should be agreed upon and enforced by a global alliance, but other than that – everyone should have the freedom, independence and right to live how they wish, given that in doing so, they don't infringe on the rights of others to do the same. People who wish to live in a secluded world (racists etc) should be able to do so, but also be held responsible for their choice when it comes to co-operating with others. When everyone gets what they want, then what works and what doesn't in terms of prosperity, achieving happiness and a meaningful life will become obvious really fast

  11. As I’m a kiwi ie live in New Zealand most of us work hard play hard and know how to relax and enjoy the relaxed live stile wile the majority of us are comfortable in our life stiles what I think we are very rich for is being tucked away from the northern hemisphere we’re it’s seems you lot a just out to destroy each other for individual greed just my apin have a good year

  12. The point of the USA was to have a number of small states that took care of most of the country stuff (e.g. murder is not a federal offense, it is illegal in each state instead), while the federal government facilitated state interactions, military, and trade. The 16th amendment (senators elected by popular vote instead of selected by state legislators) removed the state's primary check on federal power, and was followed by huge increases in federal power. The 20s boom and 30s bust were likely results of federal power such as the federal reserve, and during WW2 the federal government even implemented wage caps and rationing, essentially making communist-like centralized economic decisions, which led to things like employer health insurance as an extra incentive other than wage, which distorted the healthcare market even to this day. Local control is better.

  13. The Small Countries are fantastic but couldn't exist the way they are today without Enormous Industrial Countries such as the United States and China, India to a lesser degree but they will get there soon. These countries would still be prosperous in a world with only small countries but no where near as prosperous as a world with a significant mix of the two kinds of countries. As for independent cities we used to do that, they were called city-states, and while somewhat successful they almost always ended up integrated into larger entities because they didn't have the economic or military power to go it alone.

  14. Many of the top 10 countries are not just small, they are micro… In addition, many are countries with very favorable tax rates leading to that many international companies and high-net-worth individuals set up shop there. There is no coincidence that most of big tech is having their European HQs on Ireland, something that has skyrocketed Ireland's GDP. Also 2 out of the top 10 are oil based economies. With that in consideration, out of the top 10:
    – 2 are oil based economies (Norway, Qatar)
    – 6 are tax havens (Liechtenstein, Monaco, Luxembourg, Switzerland, Macau, Ireland)
    Excluding the USA (as it is quite a large country), then there is only Iceland left… So size may matter, but probably not as much as oil and low tax rates.

  15. Is it possible that the pseudo city-states are more prosperous because transportation of goods is less expensive if you're taking from one building to the other it's less expensive than taking from one state to the other

  16. governments of large countries have some of the similar problems faced by large corporations. more bureaucracy .. sluggish .. too may interest groups to satisfy etc

  17. I think a world of lots of small countries would be better. It would encourage more international cooperation and fairness of trade.

  18. The music is so jarring and odd… I love you and your videos…but could really do without the blasting music montage moments. Hate them.

  19. You're cute. All of the countries you list have US protection. I've found that I pay fewer bar tabs when my little ass says "oh Simon Whistler is picking up the bill"

  20. Oh, come on dude, really? Singapore is successful not because geographical location? Singapore is located on the one of the most world’s important trade routes. Everything about Singapore’s success is due to its location! Same for many other countries in your list. Obviously you didn’t study subject that well this time 🙁

  21. As a Greek (Greece = 10 mil) I would say it is the mindset and not the number of people… It just happens that smaller societies can be more like minded.

  22. I'm sorry, I usualy like your videos, but this time you did not justify anything… You just show some graphs that support your thesis, but you don't actualy answer the question "why are small countries richer".

  23. Maybe small countries tend to lead because there are so many of them compared to bigger countries… i mean, if you have many, many small countries, obviously they will ocuppy more spots on the rankings than just a few last countries.

  24. not difficult to figure out and also not generically applicable to all. i havent watched it yet i know. must be genius. it's rather late in the piece to be asking such a basic question and late for sleep for me.

  25. Most of their government leaders are 'experts' in money management, like to talk 'cent' in whatever dealing with the world.

  26. The one world government pushing from Brussels wont like you… One currency, one army – the many to the few tax model, is way easier for the elite to control they want to gobble up the smaller countries.. How dare the UK dare to leave lol

  27. Small countries are richer because:
    1.) small countries can be tax havens while large countries can't be tax havens since they lose tax revenue rather than gaining it from being a tax haven
    2.) statistics – large countries are made up of many smaller states so large countries will always be more "average" while smaller countries will be more extreme including richer; if you separate New York City or Tokyo into its own country its actually richer than Singapore etc…
    3.) smaller countries can have more natural resources per person like Norway, Saudi Arabia, Kuwait, Qatar

  28. None of the small countries mentioned are immigration hotspots. I doubt they pay huge amounts of people to have babies out of wedlock either.

  29. Jesus Christ people the idea here is simple. If this was a pacific planet sure we should go full ancap but its not, we have a bunch of WWs to face, maybe aliens and we have to colonize the innner solar system ASAP. Small countries may be rich but thats only on globalist trade terms and means nothing infront of real objective reality

  30. I come from Singapore, a small country. A world of small countries would be richer. It might be even more peaceful. Small countries depend on trade. This makes for peaceful relations. Nobody wants to go to war with your customer.

  31. Americans have the most money, by Americans I mean corporate America.
    American Citizens 60% have less then $1,000 in their bank as savings.
    American Citizens have no liquid assets in times of crises for exchange.
    American citizens love capitalism because it benefits the rich, they like it that way.

  32. So there were 60 countries in 1950? Really? We all know that’s fake. Secondly, most of the smaller countries are poor AF. thirdly, most tiny countries are landlocked, meaning weak economies. This is all wrong

  33. I'm 100% with you, very well done and beautiful clip. And hope for the future, I think many of the large countries in the world will be better off if they split into smaller units. Smaller populations also makes democracy easier and more accountable.

  34. city states of mereen and qarth are richer than that of kings landing or north .but at the same time states like dorne are quite richer .so everything has to do more with political stability than with resources or power

  35. Wow what happen to Kuwait ? I mean it used to one of the richest countries prior to gulf war but one would have thought they be back to track by now. I you recall Iceland went bankrupt in 2008
    but is back on the rich list.

  36. "Small countries are richer… Small countries are too poor to be bureaucratic."

    Make up your mind.

  37. It's not the size of the country.

    If a country embraces Free market Capitalism reforms, it will prosper.
    Collectivism (like socialism or communism) will only destroys the economy and eventually the whole country.

  38. Czech republic did not get rid of the socialist economy entirely. It once had a complete market economy after the fall of the communist regime in 1989, but since then the socialism-based economy only grows. The country even entered the EU, which only proves it has no interest to have a pure market economy (EU isn't really a free-trade organisation).

  39. The rich small countries mainly have oil or are tax havens, imo.
    Even Ireland is a tax haven undermining the EUs tax base. It annoys me that Ireland is now richer than the UK after we have been paying them £billions through the EU for 40 years. Ireland defence budget is 0.33% of GDP. NATO countries it is 2%.

  40. smaller samples tend to show the extreme results,for example its easier get number 4 on all the five dices than getting number 4 on all the 100 dices,apply thee same analogy to the smaller countries.

  41. There are lots of different reasons why some small countries are successful. Not all small countries are successful of course because it is mainly related to their geographical locations. Small countries in rich parts of the world or in strategic locations tend to be successful, those in poor parts of the world generally don't. Some small countries have a disproportionately large resource base like Qatar or Dubai. Some are tax havens that attract a lot of rich people, like Monaco, Lichtenstein etc. Some like Switzerland have banking secrecy which concentrates rich people, finance industries and capital in their borders. Some have key locations like Singapore which at the confluence of rapidly swelling trade routes has grown into the world's biggest port, a role which also comes with all the financial business of trade, shipping, insurance etc. etc. Others are city states and basically have very little rural hinterland. This brings me to a key point about why is it harder for large countries to be so concentratedly wealthy as very small ones or city states. This comes down to the nature of the large rural hinterland. Firstly it requires more energy to transport things by land then by sea. This creates a financial barrier to the flow of goods and people over large land areas. Regions depending on agriculture tend to be poorer than urban industrial centres. This is because agriculture is less dynamic an activity than industry because its growth is limited by the availability of suitable land. Rural population growth typically outstrips the growth of agricultural activity leading to a perennial problem of rural underemployment and unemployment. This in turn leads to a flow of poor people into the towns and cities putting downward pressure on city wages. In rural areas the population tends to be spread out over a large area making it disproportionately expensive, sometimes prohibitively expensive, to provide adequate services of transport, electricity, water supply and treatment, education and medical care thus depressing the standard of living of those in the countryside. The neo-Liberal cure all of having more external trade is like everything else that comes out of neo-liberals' mouths, it is self-serving. They analyse every economy from the point of view of how foreign investors can get rich from it, rather than what is it like to be an average citizen living in it. Small countries are forced to have more external trade because they do not have the capital, human capital and other resources to produce the full range of goods and services they might want to use. If they are really small they also may not be able to achieve the economies of scale in some activities to be competitive. So they have to be open to earn the foreign currency they need to import all the great range of things they can't produce for themselves. The deluded idea pushed by neo-liberal economists that a higher dependence of an economy on external trade is a sign of wealth is practically the reverse of the truth. The classic banana republic, only a few of which exist now, but a few decades ago were common, is the perfect example of extreme poverty correlating to extreme export dependence. Countries with a high export dependence are subject to external shocks they cannot control such as price volatility for their exports which can suddenly hit the country hard. The corollary of high dependence on external trade is a small domestic market, which is the very definition of poverty. Most wealthy advanced countries have a relatively small dependence on external trade, because their populations are rich so there is a large domestic market which dominates. An advantage of the domestic market is that trade cycle problems can be managed by the state through fiscal and monetary policy, something you cannot do about the world market for your exports.

  42. Of course it´s better to have many small countires. Every nation should have it´s own one. The Scots, the Catalans, the Ainu the Yanomami, the Lakota and so on.

  43. 2:47 your list is wrong. Qatar is the richest country in the world not Liechtenstein. And the United Stated is not one of the 10 richest countries.

  44. One of Africa’s main problems is the countries are not realistic. Countries like the Democratic Republic of the Congo are so huge, and have so much diversity in ethnic groups it’s not realistic to have 1 country there.

  45. Ok so according to this norway,a country with a size of 385 thousand km squared is small bur korea rep a country with about 100 thousand km squared is considered not smal………..great

  46. In my opinion, only small countries prosper because nations like those in G7 try to keep big countries poor. They are just too afraid.
    Prime examples are how the US destroyed the economy of Japan with the Plaza Accord and the current trade dispute.

  47. It a lie the only reason why there rich is because they don't have space to build more houses or there military don't have many soldiers and they don't attack a lot. If they had more people more house more soldiers more weapons then it will lose lots of money and it won't be rich anymore.

  48. It depends on how we manage the country, many small countries are very poor. Look at Central America and the Caribbean.

  49. It is not a question of more or less independent cities and the rest (country side).In my opinion the ideal structure is the independent nation state, based upon historic identity as you can see in the divide of the synthetic Yugoslavia. Nonetheless there are regions in the world that need a restructuration, especially Africa. Most of its borders were drawn by the colonial empire states at the conference in Berlin in 1884/85. This continents borders should be redrawn along the precolonial tribal borders. That´s the only way the african nations can overcome their colonial past.

  50. The only answer for that I think it's because they have a smaller population which mean fewer competitions…and if a bigger nation is on the top then that's would you call a monster country…But if a smaller country is still poor then there's a problem with the government.

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