My topic is the economic advantages of being America. First, it helps to be large.
Other things equal, a country that is the size of the largest (that is, the US) has an
advantage relative to the average-sized country. In a sample of 101 countries, the
advantage shows up as an estimated difference in income per capita of 54%.1 The
advantage is all the greater if there are no internal barriers to trade. The United States
since its inception has always been fortunate to have free trade internally, due to the
Interstate Commerce Clause of the U.S. Constitution, which specifies that only the
federal government can regulate trade among the 50 states. Other large countries such as
Canada, China, and Russia have many internal barriers obstructing goods and services
from crossing among their provinces.2
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. Migration within the United States has historically been a major