Are there enough people in Greenland for a whole country?

Greenlanders have been pressing for more autonomy from Denmark, and looking forward to independence.  Anne Sibert asks, "Undersized: Could Greenland be the new Iceland? Should it be?"  Greenland has 60,000 people, is that enough for a nation-state?

She points out that:

• there is little to suggest that small countries grow faster than larger ones.
• small country output fluctuates more than larger country output - their production is simply less diversified.
• small country consumption fluctuates more than that in larger countries
• public goods have an important fixed cost component - so the per capita cost of public services will be higher for a small country.
• "...it is also likely that the per capita administrative cost of income taxes is decreasing in country size. As a result, smaller countries tend to rely less on relatively efficient income taxation and more on relatively inefficient taxes, such as customs taxes."
• "...a lack of competition in the provision of non-traded goods in small countries can lead to inefficiency."
• it's not clear there be enough qualified and talented people to staff of the agencies of a modern state
• "...Farrugia (1993) suggests that very small countries may also suffer because of their high degree of interpersonal relations...  Farrugia comments that, “Many necessary decisions and actions can be modified, adjusted and sometimes totally neutralised by personal interventions and community pressures. In extreme cases, close personal and family connections lead to nepotism and corruption.”
• "...each civil servant is forced to play more roles than he would in a more populous society. Such multi-tasking can be demanding and makes it difficult to build up expertise in a particular area."
• and it's not clear that policy-makers in a small remote polity will be able to avoiding becoming insular in their thinking?

There are work-arounds.  For example a country can import or hire expertise.  Also, "Residents of a country with variable output can smooth their consumption across states of nature by holding a diversified portfolio of home and foreign equity."  Perhaps a portfolio could be built with a resource investment fund similar to Alaska's permanent fund.

Sibert knows a small nearby Arctic economy well: Iceland.  She and her husband Willem Buiter wrote a paper on Iceland in April 2008, projecting the financial disaster months before it took place.  She's now a member of the Monetary Policy Committee of the Central Bank of Iceland.

Comments

[ceti_alpha]

The problem of smaller administrative units is also present in Nunavut which has been struggling since it was carved out of the Northwest Territories. While everyone would like to brave face the problems given the significance of this fillip to cultural affirmation (which would then almost magically translate into higher self-esteem and enterprising spirit), placing too much hope in this kind of devolution is tantamount to "geographical fetishism".

Then again it would make sense if national boundaries could be transcended and a circumpolar union of sorts be established between Greenland, Nunavut, and maybe Iceland.

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