You made a good point without even realizing it. Comparing Singapore to Indonesia shows just how powerful playing Tall can really be, then you go and compare them to China and say "Well playing tall just doesn't match up". Well obviously China is out of their league, but if you compared China to Japan, another extremely tall nation. living on a thin island which is mostly mountains, I think you would be surprised to know that Japan invaded and in fact defeated China in WWII. So clearly there is *another* real world example of a Tall nation beating a Wide nation.
Post-Industrial Revolution Earth is not a good comparison for a 4X game where all players start equal. Singapore vs. Indonesia is like a merchant enclave vs. a normal empire 20 years after reaching FTL. That kind of situation is not possible with player empires without horribly screwing up the balance of the game.
And using your own line of reasoning, the real world clearly shows that being both tall AND wide is perfectly possible, and that there isn't a very good correlation at all between country size and level of development. Which means the real world provides no good argument as to why a large empire shouldn't be able to be as tall as a small empire.
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