While the terms country, state, and nation are often used interchangeably, there is a difference.
A State (note the capital “S”) is a self-governing political entity. The term State can be used interchangeably with country.
A nation, however, is a tightly-knit group of people which share a common culture. A nation-state is a nation which has the same borders as a State.
Country, State, and Nation
Definining an Independent Country
by Matt Rosenberg
http://geography.about.com/cs/politicalgeog/a/statenation.htm
States and Independent Countries
Let’s start with what defines a State or an independent country. An independent State:
・ Has space or territory which has internationally recognized boundaries (boundary disputes are OK).
・ Has people who live there on an ongoing basis.
・ Has economic activity and an organized economy. A country regulates foreign and domestic trade and issues money.
・ Has the power of social engineering, such as education.
・ Has a transportation system for moving goods and people.
・ Has a government which provides public services and police power.
・ Has sovereignty. No other State should have power over the country’s territory.
・ Has external recognition. A country has been “voted into the club” by other countries.
There are currently 196 independent countries or States around the world. Territories of countries or individual parts of a country are not countries in their own right.
Examples of entities that are not countries include: Hong Kong, Bermuda, Greenland, Puerto Rico, and most notably the constituent parts of the United Kingdom. (Northern Ireland, Wales, Scotland, and England are not countries.)
A “state” (with a lower-case “s”) is usually a division of a federal State (such as the states of the United States of America).
Nations and Nation-States
Nations are culturally homogeneous groups of people, larger than a single tribe or community, which share a common language, institutions, religion, and historical experience.
When a nation of people have a State or country of their own, it is called a nation-state. Places like France, Egypt, Germany, and Japan are excellent examples of nation-states. There are some States which have two nations, such as Canada and Belgium. Even with its multicultural society, the United States is also referred to as a nation-state because of the shared American “culture.”
There are nations without States. For example, the Kurds are stateless people.
The state is a political and geopolitical entity;
the nation is a cultural and/or ethnic entity.
The term “nation state” implies that the two geographically coincide.
(http://en.wikipedia.org/wiki/Nation_state)