The large home market -- the sine qua non of capitalist development -- does not primarily depend upon the size of the territory or population. Neither England (the first fully capitalist nation) nor Japan (the last to embark upon industrialization among rich nations) is large; in fact, they are rather tiny by any standard, and certainly far smaller than China, India, & Brazil. All so-called NICs are very small, too. The creation of the home market depends upon class relations (whether or not the agrarian sector has been proletarianized; whether or not the landless who migrate to urban centers can be absorbed into the regular & industrial sectors, rather than into the irregular & service sectors; whether or not the state actually exercises effective political control over all its territory; whether or not the state can effectively & equitably collect taxes, especially from capitalists & petty producers; whether or not the state holds other key economic instruments [controls over currency, interest rates, etc.]; etc.), reinforced or undermined by imperial powers' political interventions & competition in the world market.
That said, a large territory & population would be an advantage, provided that it is unified & well governed. So-called nation-states on the periphery have been built upon the ruins of the projects of visionary "nationalists" who in fact didn't think in terms of petty nations & who dreamt, instead, of "Gran Colombia," Pan-Arabism, Pan-Africanism, and so on.
Bolivarianamente,
Yoshie