Some people might be wondering why the world of Neon Twilight is so fragmented, and why Europe and Asia are filled with so many tiny nation-states, when the power of the state is apparently very strong across the globe. The reason lies not only in ethnic loyalties, but also in the nature of an integrated world economy.

The main historical purpose of large nation-states has been to provide internal (police, law & order) and external (army, navy, spies) security to its citizens. The second purpose which became more apparent as industrialization proceeded apace has been to provide a large integrated market with common standards, regulations, predictable taxes, and stable economic policies. A large nation-state provided companies with the ability to easily expand and take advantage of economies of scale, as well as government research contracts, subsidies, and protective barriers against foreign competition. High international tariff barriers meant that almost all companies had to rely on a large domestic market to become significent players.

The advent of free trade and firm military alliances changed all this radically. In a world where free trade is the norm and international trade treaties (such as those negotiated by the World Trade Organization) provide equal footing for all companies no matter their country of origin, the need for a 'home country' becomes diminished. Small countries now have access to vast markets which were previously denied them. The puny negotiating power of a small city-state is now replaced by the global power of the WTO or World Bank. If a small country can benefit from security alliances with larger patrons (such as Singapore with America, or Gibraltar with Britain), then there is less need to be part of a large nation-state. The cumbersome nature of many large states can all be detrimental to local regional development. Many federal governments also siphon tax funds from rich regions to poor ones, to the great irritation of those living in the wealthier places. Witness North & South Italy, or Ontario vs. the Maritimes in Canada.

All this means that enterprising city-state dwellers can often benefit more by forming a small nation-state than by being part of a large one. In a world stitched together with tough agreements, alliances and treaties (such as those enforced by Protocol), the need to be part of a grand state is more than offset by the benefits of living in your own ethnic (often racially pure) statelet. If the region is blessed with an abundance of some vital resource (eg: oil in Kuwait) or feels repressed by the majority of the country (eg: Quebec, Eritrea, Singapore) the desire to separate will be very strong.

The key here is a global free-trade framework that applied to all or most countries, with dependable dispute-resolution and enforcement mechanisms. Given such conditions, tiny countries could flourish. Without such a framework, countries will join into regional economic unions to protect their interests, with the possible creation of rival economic blocs such as Fortress Europe, Confucian Zone, and North America. Neon Twilight assumes the former, because the latter would degenerate into a 1984-esque scenario which, while suitably grim, would not have the chaos of a true cyberpunk world.

Today, at 193, the number of countries in the world is astonishing. By 2038 that number may well rise to 250 or 300 nation-states, depending on the fate of Russia. Statelets may or may not be wealthier, but in a world of free trade and global communications the old barriers to wealth creation will be fewer than today. Today small countries such as Iceland (pop 230,000), Finland (pop 3m), Singapore (pop 2m), and Mauritius (pop 5m) have some of the highest per-capita income in the world, and can operate on a global basis.

However, a world fully fragmented into statelets would probably be too unstable and ridden with factional fighting to be able to enforce the kind of free trade and Protocols needed to maintain peace and smooth business transactions. That is why Neon Twilight includes several large countries which dominate regions and provide a stabilizing factor in regional power politics. The United States - despite its troubles at home - maintains its Pacific Zone, Russia rides roughshod over the Central Asian Steppe, the European Union Commission keeps its member-states in reasonable balance, Cathay exerts power over democratic China, Azania over large chunks of Africa, and Brazil over most of Amazonia.

Nevertheless, the pressure exerted by selfish Clans and secular Intercons continues to fracture many parts of the world into small, politicall-malleable micro-states. As a final influencing factor, the onset of the New Mutation also greatly speeded up fragmentation by alienating neighbors, feeding xenophobia, inciting injustice against national minorities, and promoting the need for isolation. The tough restrictions on international travel and the pervasive paranoia of the Biosafety Protocols adds to regional self-determination. After all, as 'everyone' knows, it's always foreigners that bring bad luck.