Replication Data for The Blessings of Scarcity: The Cold War Origins of Smaller States' Prosperity

Is smaller better for economic development? We argue that states’ past population size can be a powerful determinant of current development. Among states that gained independence shortly after World War II, states with smaller populations in their early years of independence had stronger incentives to adopt more open trade policies and employ larger public sectors. These policies “embedded” smaller newly independent states into global economy during the Cold War, building the foundations for more inclusive economic institutions and greater political stability. When the Cold War ended, smaller newly independent states were more likely to have developed the institutional infrastructure to prosper in the globalizing yet politically volatile early 21st century. We test this argument by examining the developmental trajectories of 83 states that became independent between 1946 and 1975. Newly independent states with smaller populations during this period have had on average higher levels and rates of post-Cold War development. They also had more open trade policies and larger public sectors during the Cold War. These policies correlate with more inclusive economic institutions and greater political stability in the post-Cold War era. A comparative case study of Oman and the People’s Democratic Republic of Yemen (PDRY) illustrates the mechanisms linking newly independent states’ size at independence and their post-Cold War development.