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After having increased for centuries, territorial state sizes started declining toward the end of the 19th century and have continued to do so until today. What explains this puzzle? We argue that ethnic nationalism is the main driver of this development. The analysis relies on various spatial data resources on state borders and ethnic geography to test the observable implications of nationalism, including geocoded ethnic maps that trace settlement areas back to the 19th century in Europe. Focusing on deviations from the nation-state ideal, we postulate that states' internal fragmentation leads to reductions of states' size and that state-carrying ethnic groups' spilling over state borders makes expansion more likely. Conducted at the systemic and state levels, our analysis exploits information at the interstate dyadic level to capture specific nationalist processes such as ethnic secession, unification and irredentism. These processes can be used to reconstruct trends in average state size for ethnic and non-ethnic border change. We find that while nationalism exerts both integrating and disintegrating effects on states' territories, it is the latter impact that has dominated. This finding offers a straight-forward answer to the puzzle of declining state sizes.

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