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Predecessors of the territorial state
The first sign of state existence dates back to 6000 BC. Written and pictorial records from a settlement called Jericho maintain the existence of heavy urbanization for over two thousand years but throughout their history, states have only encompassed a small portion of the earth. Cities emerged around the same time period between 8000 and 7600 BC and eventually merged with states to create city-states that ruled for a few thousand years. City-states were often centered with a capitol controlled by a priest that collected offerings from the surrounding lands. By 2500 BC, some cities began developing into empires that ruled by force and tribute and from then on, the existence of states and cities were central to the great civilizations. The formation of towns and cities allowed for the creation of small independent states, which led to the emergence of large territorial states.

Ancient Egypt
Originally, Ancient Egypt was ruled through a strong central government in which Egyptian kings, or Pharaohs had complete say over political, economical or military matters. The transition to the adaption of territorial states can be seen during the reigns of the Egyptian Middle Kingdom (2040 - 1640 BC), and the Egyptian New Kingdom (1550 - 1070 BC). Due to natural causes, the Old Kingdom fell and gave way to the Middle Kingdom where several merchants began to gain power and deviate from the pharaoh's power. This deviation introduced a form of territorial state due to the introduction of independent rules and power from that of their nation. During the reign of the New Kingdom, diplomatic relations were established with the Hyksos and Hitites, where they each had sovereign communities within their nations that acted as territorial states.

India
After the collapse of the Harappan Civilization in 1700 BC, India underwent a transition from complete territorial rule to sovereign territorial states. During this time, Indo-Aryans and the Vedic peoples made way into the territory of India and made a set religous texts known as the Vedas, hence the time period known as the Vedic Age (1700 - 600 BC). With Hinduism also on the rise, it gave way to independent states where each had to maintain peace and order with other neighboring independent states. Unlike most independent states, there were differences in power among those residing in India. This however did not last due to the the Mauryan Empire preventing sovereign states from acquiring power. The Maurayan Empire lasted from 272 BC to 231 BC in which the death of the last ruler Asoka allowed the next empire (the Mughal empire) to reestablish new sovereign states.

Capital
The other competing theory maintains that there is a definite stronger link between commerce and territorial state formation. The spirit of "exploration and commerce" that began as maritime routes and destination points on a map eventually gave way to the idea of a bound world as a place of outlined territories. In the 15th century the creation of global sea passages that connected the world together in a true world economy of trade and transportation. Economies on almost every continent that once were separated became connected in a global maritime trading system where risk was distributed more evenly and demand and supply networks became larger as a result which encouraged economic cooperation. The growing global market economy, state populations, and economic ambitions encouraged the intensification of the use of land by territorial states to increase agricultural production for commercial markets. The economic and legal systems present in the territorial state indicated some form of government regulation and cooperative use of territorial land and water. Territorial jurisdiction consists of deciding patterns of land-use including the behavior of the people living within territorial lands. Territorial states became fixed to local and expanding global markets for the economic capital that they produced.

These growing global market economies also allowed for many "prosperous urban centers" to be able to counter any opposing threats from neighboring rulers. Without any urban or commercial growth being found in a particular area, the chances of a large territorial rule happening increases. This can be seen with such nations like France or England in which monarchs forcibly took control of these territories. As seen later on, the increase in prosperous cities correlated with the increase in consumer demand. This insatiable demand led to more global exportation and importation among transnational city states.

The Treaty of Westphalia
In 1648, two Westphalian cities known as Münster and Osnabrück located in Germany as well the Holy Roman Empire signed several peace treaties that ultimately gave end to the Thirty Years' War. This war posed a religious conflict between Catholics Habsburgs and their counterpart Protestants. The end of this war allowed many nations to claim independence and gradually give birth to a new state system in nations. This was seen especially in the Holy Roman Empire, where several territorial states gained sovereignty and acquired new individual power. In fact such power included the independent state's ability to choose their own official religion rather than abiding to the nationwide religion, the obstruction of adhering to a higher authority, and equal state rights. Nowadays, the benefits from the peace treaty have slowly began decreasing due to new technological, psychological, and economical advancements in warfare.