Why ‘smaller’ countries, like Scotland BUT independent, seem to do it ‘better’

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‘Small countries behave with real seriousness of purpose.’ (World Economic Forum, 2012)

‘Britain is too big to run its diverse economy yet too small to manage external threats such as terrorism, organised crime, migration and pandemics.’ (Me, 21st C)

I’ve been meaning to write something like this for some time and, who knows why, today became the day.

I used to teach and research about what you might term ‘global media’ and that, unavoidably, led me to dabble in historical, political, geographical, cultural, economic, environmental, intoxicated and other perspectives on globalisation. Sounds impressive when I put it that way but much of it really was dabbling. There’s so much information out there, no single human being can get a firm grasp on more than a fragment. So, what follows can only be one perspective, partial, inadequate. Being a lone and mere-blogger, (happily) free of external examiners, editors and reviewers, I present it as a starter and, as always, welcome comments. I’ll start with my own thoughts and some forgotten steals, often evidence-free, before looking briefly at four sources I found easily online.

Thinking of countries of around 10 million or less, I think, they:

  • are better able to develop economic policies that work because their economies are not too diverse or even contradictory in their needs;
  • have less political corruption because there are less places to hide it;
  • have no imperialist pretensions or need to project hard power;
  • work on developing their soft power to influence through global agencies such as UN, WTO, EU;
  • are more willing to cooperate with global agencies to deal with global threats like organised crime, drugs, terrorism;
  • tend toward more equality and democracy, controlling their smaller elites because the latter are less integrated with military or corporate elites who might bully their government;
  • tend to be kinder and happier places.

In the particular case of Scotland, I’d argue it has the added benefits of:

  • massive natural resources;
  • a very well-educated workforce and cultureforce;
  • a better balance of collectivism and individualism.

I’ve tried not to go on, in the interests of readers, so, moving on quickly, four other folk/groups:

 

Why do so many small economies perform better? David Skilling: World Economic Forum, 2012

‘Many small advanced economies – say those with populations of less than 20 million – have performed strongly over the past few decades; they have held their collective share of global GDP constant, have sustained a competitive position that has enabled them to expand into global markets, and have responded effectively to the crisis.  And measures of income distribution and social mobility are commonly better in small countries. So, what have they done?  There is no one model.  But the successful small countries develop deliberate national strategies to engage with the world, build strong public sector capacity, and pursue inclusive growth models.  And the intense competitive realities small countries face mean that they are more likely to continuously adapt and innovate as the world changes – and less likely to run unsustainable policies.  Small countries behave with real seriousness of purpose.’

https://www.weforum.org/agenda/2012/09/thinking-small-for-growth/

Skilling doesn’t give examples of particular countries as evidence, so you’d have to research him further if you need that, but I like what he says, and it makes sense when he talks about them having to engage with the world in the way that larger countries might reject. This resonates with Tory England’s Brexit dreams and the contrasting SNP enthusiasm for Europe.

Do small countries do it better? Shahid Yusuf and Kaoru Nabeshima, World Bank, Book Review (2012)

The authors’ Arab and Japanese names suggest they don’t lack for diversity in their background thinking!

‘Three small countries studied in the book – SIFIRE (SIngapore, FInland, IREland) – not only grew at high rates but were able to sustain them. The book contends that growth recipes for SIFIRE were not tightly bound to the East Asian model of extremely high rates of savings and investment (although arguably, Singapore was in many ways the epitome of that model, thanks to its mandatory savings scheme which led to gross national savings in the neighbourhood of 50 percent for decades). The larger point is that these three countries augmented physical investment with healthy doses human capital and knowledge; by “opening their windows and letting it [knowledge in various forms, for example, that embodied in FDI] stream in”. And even though the book does not explicitly discuss it, they did so without massive infusions of foreign aid. Or perhaps it was the lack of aid that forced them to be nimble, agile, and forward-looking?’

http://blogs.worldbank.org/africacan/do-small-countries-do-it-better

This has the both the advantages and disadvantages of the Irish example, to suggest what Scotland could do. Unlike Ireland, Scotland’s starts from a position of high development and greater resources. The value of openness to knowledge flows is, I’m sure, already embraced in the SNP. Further and maybe it’s residual Calvinism, but I like the idea of a mandatory savings scheme.

Why small countries may gain more than larger countries from international trade? Simranjot in Preserve Documents

‘There is a theoretical possibility that small country may gain more than large countries from international trade. This is because a small country can specialise in the production of single commodity without significant­ly affecting its price in the international market. On the contrary, the large country specialises in the production of a single commodity, an increase in its supply will cause a fall in its price, thus adversely affecting the terms of trade. The small country may be able to trade with a large country at the price ratio prevailing in the large country or very close to it. This brings all gains to the small country.’

http://www.preservearticles.com/2011092013801/why-small-countries-may-gain-more-than-larger-countries-from-international-trade.html

Whisky, salmon and other seafood, tourism?

Why do smaller countries benefit from greater trade with their neighbours? Sanjay Kathuria, World Bank, 2015

Kathuria uses the relatively big Mexico and its trade with the USA, to offer an example of evidence that smaller countries tend to benefit more than their large neighbours do from trade relations, but I think it remains useful for thinking about Scotland and why it’s economy would thrive, trading with the larger European economies such as Germany.

‘“The real end winner of NAFTA (North American Free Trade Agreement) is going to be Mexico […]” said then Mexican president Vicente Fox, in 2001. He was referring to Mexico’s gains from trade integration with the USA through NAFTA. Vicente Fox was right. Mexico has continued to make sustained gains in trade over a 20-year period after signing NAFTA in 1994 with the US, its much larger partner.’

http://blogs.worldbank.org/endpovertyinsouthasia/why-do-smaller-countries-benefit-greater-trade-their-neighbors

Kathuria goes on to look at South Asia and make a similar points.

 

The End:

I’ve dabbled, again. There’s much debatable in the above and there are many Scotland-specific factors to be considered, but I leave this task feeling optimistic about the possibilities it suggests.

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8 thoughts on “Why ‘smaller’ countries, like Scotland BUT independent, seem to do it ‘better’

  1. Alasdair Macdonald September 15, 2018 / 6:25 pm

    Thanks for this. There is a lot in it and some aspects probably need me to do a bit more reading. However, I think that the ‘small country’ concept has a lot to commend it, despite often being maligned by colonialists as too wee and no very good, and incorrigibly parochial, unlike the parishes of Westminster and ‘the Home Counties’.

    Using the context of Scottish eduction as an example, there was what was called ‘the policy community’ of those who created the strategies. This was pretty small in numbers, and, although distributed around Scotland, they generally knew each other personally or did so at one remove. I think that this meets many of the initial set of bullet points set out. Although there are always tendencies to cliquishness (c.f. Scottish Labour), the fact that the membership was geographically distributed meant that its members were in daily contact with their local communities. However, given the relative small size of Scotland and the smallness of numbers within the ‘community’meetings of all or most were easily convenable.

    Despite what the teacher unions say – their officials are actually part of the policy community – Scottish education is pretty good in many ways.

    I think that there are similar communities within business – large and small – health, social work, farming, fishing, trade unions, the third sector, etc across Scotland. As your blog shows they do pretty well in their fields.

    So, I agree with your views, which, of course, I would say, wouldn’t I, being and independencista? However, when we look at countries like Germany, Switzerland, the Nordic countries which have widespread devolution of powers to increasingly local levels, the ‘small is better’ concept works pretty well.

    Liked by 1 person

    • johnrobertson834 September 15, 2018 / 7:38 pm

      Yes as you make clear using education as a good example of engagement across a coherent system.

      Like

  2. Donald McGregor September 17, 2018 / 5:52 am

    Thanks once more for your random thoughts – I’m glad I am not alone in having uncontrolled randomness of brain activity.
    I am lazily not looking up figures, but is it not the case that SME companies make up the majority employers in this (scotland/uk) country?
    Same argument as for countries? Smaller/ more agile/ more directly connected internally?

    Liked by 1 person

    • johnrobertson834 September 17, 2018 / 6:13 am

      Interesting. I think so. I used to work in the smallest teacher education institution and we were often praised for cohesion and speed of change.

      Like

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