ABSTRACT
This chapter examines the relationship between the independent variables, size and wealth. Wealth, in turn, provides the resources needed for governments to provide benefits to citizens, and it is a major factor in explaining country governance. In conjunction with country smallness, wealth explains from 41 to 67 percent of the variation in all six governance indicators for 212 countries. Nevertheless, some scholars argue vigorously that the great differences in the wealth of nations are mainly due to differences in the quality of their institutions and economic policies. In cross-national studies, total country wealth is typically measured by estimates of gross domestic product (GDP), the total value of the goods and services produced in a country in a given year. The high Rule of Law (RL) scores for both the United States and Iceland move closer to predictions, benefiting from both countries' high wealth.
