From the comments: Microstates and military protection

I took a look at the table Easterly & Kraay provided in the paper that you cited (here is an ungated pdf; it’s on pg 22) and all of the rich small states save for The Bahamas (which is 50 miles away from Florida) enjoy military protection from larger polities.

Bahrain and Qatar have the US Navy looking after them, Iceland is in NATO, Bermuda is a Crown Colony, and Luxembourg is nestled comfortably in between France and Germany (and people say the EU is worthless!). If you throw Macau and Hong Kong into the mix you’re looking at a well-protected group of microstates.

It’d be very interesting to see how empirically robust this observation is, but I suspect it won’t be done because most people who focus on microstates tend to have a soft spot for them. To acknowledge the deep intertwinement that successful microstates have with larger polities is to acknowledge the prominence that incoherence and messiness enjoy when it comes to existence of states and the issue of sovereignty.

This is from yours truly, in a dialogue with Chhay Lin on microstates and economic development. Read the whole thing from the top!