Small countries, we know, are small. Big countries are big. The European Union has had a significant impact on both, as has globalisation. The question is: does size make any difference as to how these countries adjusted their political economies and policies in response to European integration as well as globalisation?

In recent years, the smaller countries of Western Europe – consisting of all Nordic EU member states plus non-member Norway, the Continental countries of Austria, the Netherlands, Belgium, Luxemburg, plus non-member Switzerland – appear to have adjusted their political economies more quickly and more effectively to the new globalised and Europeanised environment than the bigger EU member states of Continental Europe like Germany, France and Italy. The smaller countries have higher GDP per capita, similar if not higher rates of productivity and lower rates of unemployment than these bigger states. And they accomplished this with more cooperative and better-coordinated relations between firms, labour and the state through corporatist concertation. Moreover, the small countries’ political economic adjustment has not been accompanied by any serious undermining of their welfare states. The Nordic and Continental small states have all largely avoided both the problems of poverty, inequality and lack of job security plaguing Anglophone Europe and, in many cases, also the insider-outsider division of the labour market of the bigger Continental and Mediterranean countries (see Table 7.3 in the concluding chapter). In addition, they have introduced flexibility into labour markets without jeopardising security, increased the sustainability of pension systems without seriously affecting pensioners’ income, and reduced the generosity of social assistance programmes without reneging on commitments to equality, universality and/or solidarity. Among Anglophone countries, however, Ireland as a small state with a more recently open economy has also managed to address problems of poverty and inequality (at least until the current economic crisis) while improving labour relations through a move to a kind of state-led corporatism.

The smaller Nordic and Continental countries of Western Europe also have had a better scorecard with regard to EU-related policies (see the statistical data presented in chapter 7). In the Single Market, they tend to have higher rates of compliance with EU economic policy directives, in particular the Scandinavian member countries.