Courtesy Reuters

The Rise of the Region State

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The Nation State Is Dysfunctional

The nation state has become an unnatural, even dysfunctional, unit for organizing human activity and managing economic endeavor in a borderless world. It represents no genuine, shared community of economic interests; it defines no meaningful flows of economic activity. In fact, it overlooks the true linkages and synergies that exist among often disparate populations by combining important measures of human activity at the wrong level of analysis.

For example, to think of Italy as a single economic entity ignores the reality of an industrial north and a rural south, each vastly different in its ability to contribute and in its need to receive. Treating Italy as a single economic unit forces one--as a private sector manager or a public sector official--to operate on the basis of false, implausible and nonexistent averages. Italy is a country with great disparities in industry and income across regions.

On the global economic map the lines that now matter are those defining what may be called "region states." The boundaries of the region state are not imposed by political fiat. They are drawn by the deft but invisible hand of the global market for goods and services. They follow, rather than precede, real flows of human activity, creating nothing new but ratifying existing patterns manifest in countless individual decisions. They represent no threat to the political borders of any nation, and they have no call on any taxpayer's money to finance military forces to defend such borders.

Region states are natural economic zones. They may or may not fall within the geographic limits of a particular nation--whether they do is an accident of history. Sometimes these distinct economic units are formed by parts of states, such as those in northern Italy, Wales, Catalonia, Alsace-Lorraine or Baden-Württemberg. At other times they

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