  This paper examines whether there is a premium in country size. We study
whether there are significant gains from being a small or a large country in
terms of certain socioeconomic indicators and how large this premium is. Using
panel data for 200 countries over 50 years, we estimate premia for various
sizes of nations across a variety of key economic and socioeconomic performance
indicators. We find that smaller countries are richer, have larger governments,
and are more prudent in terms of fiscal policies than larger ones. On the other
hand, smaller countries seem to be subject to higher absolute and per capita
costs for the provision of essential public goods, which may lower their
socioeconomic performance in terms of health and education. In terms of
economic performance, small countries seem to do better than large countries,
compensating for smallness by relying on foreign trade and foreign direct
investment. The latter comes at the cost of higher vulnerability to external
shocks, resulting in higher volatility of growth rates. This paper's findings
offer essential guidance to policymakers, international organizations, and
business researchers, especially those assessing a country's economic or
socioeconomic performance or potential. The study implies that comparisons with
medium-sized or large countries may be of little utility in predicting the
performance of small countries.
