The terms "state," "nation," and "country" are often used interchangeably by those who are unfamiliar with the proper use of these terms. To further muddy the waters, phrases such as independent State and nation-state are frequently thrown in as well. While these terms are similar and easily confused, some distinguishable differences set them apart. In some cases, "State" and "country" may be used to describe the same area, a "nation" is a somewhat less well-defined term.
When used with an initial capital letter, State has a very different meaning than the one commonly known among US citizens. An independent State is the same as an independent country — it's an area that has internationally recognized boundaries and its own government. It must also be recognized by other countries and have sovereignty, meaning that it is not under the power of any other country. Other requirements include permanent residents, a transportation system, an education system, and an organized economic system. It issues its own money and is able to regulate both domestic and foreign trade.
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Without the initial capital, the term has a very different meaning, and it's usually used to describe a smaller division of a larger country. Using the United States of America as an example, America is the governing country while each of the 50 states is a smaller defined territory within the larger government. The term "province" may also be used in some countries, such as Canada.
Many countries also have territories. Australia, for example, has six states and two major territories. While a territory is under the government of a larger nation, it usually lacks the same governmental powers that a state or province will have.
The term "nation" is a bit more difficult to define. A nation is a group of people who share a language, culture, institutions, history, and religion. These groups are larger than a single tribe or small community, and often encompass an entire country. When a nation of people has its own distinct country, this is referred to as a nation-state. Examples include Japan, Germany, and France. Some countries can have multiple nations, as in the case of Canada, and not all nations posses their own State.