In modern usage, it typically refers to the six smallest states in Europe by area: Andorra, Liechtenstein, Malta, Monaco, San Marino, and Vatican City (the Holy See).
According to the qualitative definition suggested by Zbigniew Dumieński (2014), microstates can also be viewed as "modern protected states, i.e. sovereign states that have been able to unilaterally depute certain attributes of sovereignty to larger powers in exchange for benign protection of their political and economic viability against their geographic or demographic constraints.
"[2] In line with this definition, only Andorra, Liechtenstein, Monaco, and San Marino qualify as "microstates" as only these states are sovereignties functioning in close, but voluntary, association with their respective larger neighbours.
Its economy is based on light manufacturing, banking and financial services, shipping and trade, R&D in biotechnology, marine environments, and tourism.
As a result, they often have adopted special economic policies, typically involving low levels of taxation and few restrictions on external financial investment.
[14] A paper in 2020 discussed the history of the smallest European states, and compared Malta and Cyprus to Andorra, Liechtenstein, Monaco, and San Marino.
[15] Including both traditional microstates and small states in the European region yields several more examples, such as Cyprus, Luxembourg, and Montenegro.
It has permanent non-state observer status at the United Nations, has full diplomatic relations, including embassies, with 100 states,[17] and is in more informal relationships with five others.
A number of short-lived client republics were created, and the fall of the Holy Roman Empire gave sovereignty to each of its many surviving Kleinstaaten.