Small states must engage in free trade rather than protectionism. All government interference with foreign trade forcibly limits the range of mutually beneficial inter territorial exchanges and thus leads to relative impoverishment at home as well as abroad. But the smaller a country, the more dramatic this effect will be. A country the size of the U.S. might attain comparatively high standards of living even if it renounced all foreign trade. In contrast, if a territory the size of a city or village engaged in protectionism, this would likely spell disaster or even death.