Is There a Trade-off between Participation and Efficiency? A Conceptual Approach to the Influence of State Size on State Performance

This paper introduces state size to the field of public administration and discusses its effect on the performance of governance systems. State size is a timeless topic; Plato and Aristotle praised small state size as a prerequisite for integrating democracy and effective government. While the issue of state size has reappeared regularly in economics and international relations, and conventional wisdom holds that state size involves a trade-off between economic efficiency and political participation, the issue has gained no systematic attention in comparative public administration. The key argument of this paper is that state size matters for the functioning of governance systems, not as a master variable but as a qualifying feature. Its influence manifests in various trade-offs and there are disadvantages of very small as well as of very large states. This paper uses the most common measure of state size: population size. State performance is conceptualized threefold: (1) democratic quality, (2) efficient decision making and (3) efficient implementation. The first aspect, democratic quality, has been addressed theoretically by Dahl and Tufte in "Size and Democracy" (1973), where they establish a positive relation between smallness and democratic quality. Recent empirical studies, however, suggest a basic dilemma between the advantages of smallness (e.g. homogeneity, simplicity) and the disadvantages (e.g. unprofessional political system, clientelism). The second concept, efficient decision making, was linked to state size in Katzenstein’s modern classic "Small States in World Markets" (1985). A comparison of his arguments with arguments derived from the studies of federalism and decentralization (Oates, Riker, Hooghe and Marks) and comparative politics (Tsebelis, Lijphart) reveal theoretical trade-offs, or even contradictions. One can assume a trade-off between the flexibility of the decision-making process and the quality and scope of the resulting policy; state size notably influences several intervening variables, such as diversity of preferences, number of veto players, and reach of decisions. Third, the efficiency of policy implementation and public administration and its link to state size have been covered either by scholars of federalism and regionalism focusing only on sub-states, or by scholars of public administration and development but only in an anecdotal fashion. The different arguments are contrasted and then combined in this section. The underlying idea, as argued by Tullock, is that there are economies of scale but these are limited to certain policy types and can turn into diseconomies of scale when bureaucracies become too large and, hence, cumbersome to manage. The aim of this conceptual paper is to integrate different theoretical approaches and illustrate them with various secondary data such as the World Bank’s Worldwide Governance Indicators, the Bertelsmann Foundation’s detailed Sustainable Governance Indicators and measures of democracy such as Freedom House. This will shed some empirical light on the triangle between state size, democracy and governance, and on the trade-offs identified above. In conclusion, this paper will contribute to the understanding of comparative public administration by introducing and examining the little recognized connection between state size and state performance.