Having a large area within which goods and services can move freely promotes
economic performance for a number of reasons. First, a large internal market allows
economies of scale. A small economy will not constitute a large enough market to
support efficient production of some goods, or some varieties of goods. Second, a large
area is likely to have a good variety of natural resources and other endowments. The
United States had most of what a country needs to develop: capital and skilled labor in
the northeast; coal, iron ore, and good agricultural land in the Midwest; minerals and
other natural resources farther West; labor in the South, and so forth. A small country is
unlikely to have all that within its borders. Also, labor and capital can move among
regions of a country.