 6 Small Countries, Big Countries under Conditions of Europeanisation and Globalisation Vivien A. Schmidt Small countries, we know, are small. Big countries are big. The Euro- pean 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 Conti- nental countries of Austria, the Netherlands, Belgium, Luxemburg, plus non-member Switzerland – appear to have adjusted their political econo- mies more quickly and more effectively to the new globalised and Euro- peanised 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 accompa- nied 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 reneg- ing on commitments to equality, universality and/or solidarity. Among