¹ An early conference of the International Economic Association (in Lisbon, 1957) yielded a volume of papers edited by Robinson, Edward Austin Gossage, Economic Consequences of the Size of Nations (London: Macmillan, 1960).CrossRefGoogle Scholar There was thereafter little of a generalized character about national size in the economic literature until Chenery, Hollis and Syrquin, Moises, Patterns of Development (New York: Oxford University Press, 1975)Google Scholar; and Nishimizu, Mieko and Robinson, Sherman, “Trade Policies and Productivity Change in Semi-Industrialized Countries,” Journal of Development Economics 16 (September–October 1984), 177–206.CrossRefGoogle Scholar Meanwhile, however, the literature that focused on the small economy, dating from the Kuznets paper in the Robinson volume above and from Demas, William, The Economics of Development in Small Countries (Montreal: McGill University Press, 1965)Google Scholar, has expanded to include, among others, Azua, C. Real de, “Small Nations and the ‘Constructive’ Style of Development,” CEPAL Review, 2d semester, 1977, pp. 153–73Google Scholar; Jalan, Bimal, ed., Problems and Policies of Small Economies (London: Croom Helm, 1982)Google Scholar; Galbis, Vincente, “Ministate Economies: Underlying Characteristics and Macroeconomic Policies,” Finance and Development 21 (June 1984), 36–39Google Scholar; Srinivasan, T. N., “The Costs and Benefits of Being a Small, Remote, Island, Landlocked, or Ministate Economy,” World Bank Research Observer 1 (July 1986), 205–18CrossRefGoogle Scholar; and Worrell, DeLisle, Small Ishnd Economies: Structure and Performance in the English-Speaking Carribbean since 1970 (New York: Praeger, 1987).Google Scholar

² Cf. Lloyd, Peter J., International Trade Problems of Small Countries (Durham, N.C.: Duke University Press, 1968)Google Scholar; Khalif, Nadim G., “Country Size and Trade Concentration,” Journal of Development Studies 11 (October 1974), 81–85CrossRefGoogle Scholar; Jainarain, J., Trade and Underdevelopment (Washington, D.C.: Georgetown, Institute of Development, 1976)Google Scholar; Jalan (fn. 1); Downes, Andrew S., “On the Statistical Measurement of Smallness: A Prinicipal Component,” Social and Economic Studies 37 (September 1988), 75–96Google Scholar; and Codrington, Harold, “Country Size and Taxation in Developing Countries,” Journal of Development Studies 25 (July 1989), 508–20.CrossRefGoogle Scholar

³ Cf. Simon, Herbert A., “The Compensation of Executives,” Sociometry 20 (March 1957), 32–35CrossRefGoogle Scholar; Mayer, Thomas, “The Distribution of Abilities and Earnings,” Review of Economics and Statistics 42 (May 1960), 188–95Google Scholar; Williamson, Oliver E., “Hierarchical Control and Optimum Firm Size,” Journal of Political Economy 75 (April 1967), 123–38CrossRefGoogle Scholar; Calvo, G. A. and Wellisz, S., “Supervision, Loss of Control and the Optimum Size of the Firm,” Journal of Political Economy 56 (October 1978), 943–52CrossRefGoogle Scholar; idem, “Hierarchy, Ability and Income Distribution,” Journal of Political Economy 87 (October 1979), 991–1010CrossRefGoogle Scholar; Rosen, Sherwin, “Authority, Control and the Distribution ofEarnings,” Bell Journal of Economics 13 (Autumn 1982), 311—23CrossRefGoogle Scholar; Sah, Raj Kumar and Stiglitz, Joseph E., “The Theory of Economic Organizations: Human Fallibility and Economic Organization.” American Economic Review 75 (May 1985), 292–97.Google Scholar

⁴ According to Lyndall Urwick (who drew on Henri Fayol, the French pioneer in administrative theory, and who collaborated with Luther Guliek in putting out in 1937 Papers on the Science of Administration as a contribution to the study of reform of the U.S. presidency in which Guliek was engaged), “No supervisor can supervise directly the work of more than five, or at most, six subordinates whose work interlocks; Urwick,” Elements of Administration (New York: Harper, 1943), cited in Gross, Bertram M., The Managing of Organizations (Glen-coe, Ill.: Free Press, 1964), 148.Google Scholar

⁵ Gross (fn. 4), 375.

⁶ Not all internal differences, even conflicts, are to be avoided. Competition among collateral units is usually healthy, and many systems place little premium on lockstep conformity.

⁷ The constraints do not apply to a third case, where the performance of the center's objectives is not measurable. Thus, for example, if the sole purpose of an organization is to save souls, the implementation of the activity can be radically decentralized. But if the success of joint efforts is subject to common observation, those in whom responsibility for the common effort is centered must limit themselves to some combination of the two alternatives in the text.

⁸ Encycbpaedia Britannica, 13th ed. (1926), s.v. “Staff.” (The first 28 volumes of this edition were identical to the nth edition of 1910–11; three supplementary volumes were added to cover the period 1910–26.)

⁹ A reader of an earlier draft of this paper objected that the rule in the text does not cover the case of a national government that may appropriately, as a matter of policy, wish to retain control over a local activity (say a toxic one) even if it imposes no burdens or benefits beyond the local jurisdiction. I would argue that the bad precedent or damage to the national body politic that the denial of local option would forestall does indeed fall into the category of negative externalities—as could the abandonment of various national cosmetic uniformities that orderly centrists might value.

¹⁰ Panchayati raj means literally “government by local councils.” The recommendations were those of the Balwantrai Mehta Committee in 1958, which proposed a three-tier local government structure—village panchayats, panchayat samatis (societies of panchayats) at the block level, and district zilla parishads (district committees). See, for example, Franda, Marcus, Small Is Politics: Organizational Alternatives in India's Rural Development (New Delhi: Wiley Eastern, 1979)Google Scholar, chap. 4.

¹¹ While this is not the place to review the extensive literature that has developed over matters of local institutional reform in India, let me note two of my own writings on the subject: “Notes of a Rural Area Development Tourist,” Economic and Political Weekly, June 29, 1974, pp. A42–54; and “Overview” in Lewis, John P., ed., Strengthening the Poor: What Have We Learned? Overseas Development Council Policy Perspectives No. 10 (New Brunswick: Transaction Books, 1988).Google Scholar

¹² For an elaboration of the local-planning points, see Lewis (fn. n, 1974); also Rao, V. M., “Decentralised Planning: Priority Economic Issues,” Economic and Political Weekly 24, no. 25, June 24, 1989, pp. 1399–1405.Google Scholar On the spatial aspects of decentralized development, potentials for selective small-town development are examined in Lewis, John P., Quiet Crisis in India (Washington: Brookings, 1962)Google Scholar, chap. 7; and Johnson, E. A. J., The Organization of Space in Developing Countries (Cambridge: Harvard University Press, 1970).CrossRefGoogle Scholar The fear of metropolitan bloat expressed in these early works has been found to be exaggerated by Mohan, Rakesh and Pant, Chandrasekhar, “Morphology of Urbanization in India: Some Results from the 1981 Census,” Economic and Political Weekly, September 8, 1982, pp. 1534–40Google Scholar, and September 15, 1982, pp. 1579–88.

¹³ The following is the gist of Srinivasan (fn. 1).

¹⁴ A related consideration is worth noting. For efficiency the giant system depends more than the small country on the discipline of internal competition. Thus, it is a mistake in India, as it is in the United States (the opposite cases could be Taiwan and the Netherlands), to regard antitrust policy, or procompetition regulation, as a form of interference with market outcomes that a proper liberalization program should scrap, along with other forms of trade, investment, and price control.

¹⁵ Mahalanobis was the principal designer of India's Second Five-Year Plan, 1956–61.

¹⁶ This he says in conversation, not in the article itself, which appeared in “Economic Development with Unlimited Supplies of Labour,” Manchester School 22, 21 (May 1954), 139–91.

¹⁷ The number of potential one-on-one interfaces (N) among individual members of a group rises exponentially as the number of members of the group (a) rises. Specifically, N =

¹⁸ Prepared for the Ford Foundation, 1975.

¹⁹ The estimates in this section are drawn from the merchandise trade and GDP series in the basic tables of the World Development Report 1988, published for the World Bank (New York: Oxford University Press, 1988).

²⁰ I have left out of the present set the high-income oil-exporting countries as well as those, such as the Soviet Union, for which the 1988 World Development Report does not provide trade and/or GDP estimates.