Beyond the Nation State

The nation state promised much — but delivered little. In today’s world, far from making things better, border control threatens to make nation states worse. It has the potential to hold back human development through artificial compartmentalization of skills and markets.

In a world of near instant communications, the nation state is irrelevant. One of the outward symbols of its existence is the national border, staffed by uniformed officials checking papers and manning barricades. But what use are such border controls in the world of the Internet, for example?

Quite simply, the world has moved on. For many “statists,” the concept of the national centralized government was — in its day — progressive and forward-looking.

In contrast, the regional level was seen as parochial and inward-looking.

Limited areas, after all, bred limited horizons. Those who thought in terms of small units could never think big.

But this has changed, thanks largely — but not solely — to technological breakthroughs. In the 21st century, the opposite is true.

Now, it is the nation state itself that is anti-progressive and introspective. And it is often the regions of the state — though, admittedly, not every region — that are outwardly mobile and that work and think within a truly global and borderless perspective. They no longer think in terms of states as political monoliths, but of states that are amalgams of regions.

For this reason, the global economy acts to discipline governments and to streamline regions. Borders are nothing but a burden for old nation-states. In this context, it is amazing to see how many border disputes continue to rumble on.

What is happening is that economics and technology are enforcing a new scale on geopolitical organization. There will remain boundaries. The demise of the nation state will not usher in a bland, one-dimensional, monocultural world.

Region states are not a novelty. Just think of Venice — this great city was originally a region state that grew in the later medieval period into an empire.

Italy was studded with such centers. They were the cradles of the Renaissance and offered other contributions to our world, including double-entry bookkeeping.

Farther north in Europe was the Hanseatic League, a collective of trading cities on the shores of the Baltic and the North Sea.

These centers — such as Riga, Tallin and Danzig — were the region states of their day. They looked outward for their prosperity rather than looking to central government with their hands outstretched.

Regions are already sizable economic players in the world.

If we look at Japan, we see that the Shutoken metropolitan area — the Tokyo, Kanagawa, Chiba and Saitama prefectures — has a GNP of $1.5 trillion, ranking it in the top three in the world.

The Kansai area centered on Osaka has a GNP of $770 billion, which occupies seventh place in the world, after China.

Both these areas are entitled, by numbers at least, to qualify for membership to the G7.

Of course, in reality, the level of local decision-making allowed to them by the centralized Japanese political system is miniscule.

For aspiring region states, population size is important but not crucial. This is an elastic variable. In many ways, size is a state of mind. There are no magic numbers. But the most essential element of any successful region must be openness to the outside world.

Not only must a region state be a good place to do business, but it also must be an attractive place to work and to raise kids. This model is repeated in many places.

In China, many regions are literally unrecognizable from what they were like five to ten years ago. In five or ten years’ time, who can say what the situation will be?

The per capita income of residents in areas such as Dalian, Zhejiang Beijing and Shanghai is approaching $5,000 per year. It may have already surpassed this level in Guangzhou. This has been a massive jump in less than a decade.

Likewise, this transformation in cities in India, such as Hyderabad, has been near-miraculous. There are now malls lined with shops selling everything from consumer electronics to Western clothing.

Region states in India are now more closely integrated into global business because they are not only developing software and systems. They also are conducting fixed-line, outsourced business functions on behalf of American and European companies.

The experience of places such as Hyderabad is seen as a phenomena to be emulated by other Indian regions. The same phenomena of self-sufficiency can be observed on the other side of the Pacific — in California.

San Jose today is almost as autonomous and self-supporting as San Francisco. It is not necessary to go to San Francisco to get every service.

A typical region may defy existing political borders. In the 1990s, Catalonia in northeastern Spain became a successful economic region.

A zone of success tends to be spread, so neighboring areas in southwest France, such as Langedoc-Roussillon, have also benefited.

We should not think only in terms of geopolitics. Just as a very talented actor can bring crowds to his performances far more readily than any theatre, a particularly gifted individual can establish not only his identity in both a location and a business sector, but this person also can help draw businesses from unrelated sectors, as if by a power of magnetism.

Such a “human magnet” is Michael Dell of Dell computers. His impact on Dell’s original location — Austin, Texas — has been no less monumental.

Not only have a number of software and IT engineering facilities grown up there, but there has been a huge surge in biotechnology start-ups, to mention just one sector. It is as if Austin has grown from being an IT cluster to its own region state.