Economic model predicts Scottish independence

Saturday, 26 November 2011 21:01

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By a Newsnet reporter

According to a study published this month in the prestigious economics journal The Journal of Economic Growth, Scotland and the Basque Country would enjoy substantial economic benefits from independence.  The study also predicted that independence for  both nations is quite likely.  The study was carried out by an international team of researchers from the Carlos III University of Madrid, the Toulouse School of Economics in France, the Southern Methodist University of the USA and the New Moscow School of Economics.

The study, entitled The Stability and Break Up of Nations: A Quantative Analysis, did not specifically examine the pros and cons of Scottish or Basque independence.  According to the researchers, their aim was to create a mathematical tool to determine whether a state would break into its constituent parts or whether neighbouring states might be better off in a union.  

In devising the model the international team of economists examined pairs of countries in order to develop a mathematical model for determining how any two countries or group of countries would fare economically with greater independence or greater union between them and how likely such scenarios were.  The study ignored geopolitical factors, and instead concentrated on the economic case for independence or union.

The study also examined which EU member states would be better off from closer financial and political integration at the EU level.  The researchers found that Finland, Spain, and Greece would all enjoy an economic boost as a result of greater EU integration, but that the benefits for Germany and France were less clear cut.

Using the same model, the researchers came to the conclusion that the Basque Country and Scotland would financially benefit by leaving Spain and the UK respectively.  According to the study the amount available for public expenditure in Scotland would increase substantially after independence, the same finding was made for the Basque Country.  The study also predicted that both countries are likely to become independent in the future.  

However the same findings were not repeated for other countries in Europe which seek greater autonomy from the state they are a part of.  The study concluded that Lapland would be better off financially remaining a part of Norway and independence was unlikely.  The study also found that Sardinia would benefit economically from independence from Italy, but that Sardinia was far less likely to gain independence than Scotland or the Basque Country.

The study is based in part upon a previous study, published in 2006, which noted a correlation between poor economic performance and "artificial" states, whose borders do not correspond to those of single historical nation.  The UK and Spain are the two prime examples of such states in Western Europe.

The novel feature in this new mathematical model is that it is based not only on the economic potential of the countries but also their cultural identity, which is more original.  The model includes expected factors such as a country's wealth and other economic indicators, alongside size and cultural differences.

According to lead researcher Professor Ignacio Ortuño Ortín of the Economics Dept of Carlos III University, the most difficult aspect to quantify when making predictions is the 'measurement' of countries from a cultural point of view.  The study uses genetic differences as a proxy measurement of cultural difference.  Professor Ortuño claims that this is the most original part of the study, saying:

"We take population genetics data and then use it to support the fact that such genetic distance between regions can be used as a good tool when approaching cultural distance.

Professor Ortuño clarifies: "This does not suggest that genetics explains culture but that there is a correlation between the two.  This means that populations that have mixed more display greater cultural similarity.  We are not saying that genes explain the way a person thinks."

Using genetic data in an economic model may be controversial.  The study explains:

"Instead of relying on genetic distances as a proxy for cultural distances, an alternative would be to use data from social surveys on individuals' values.  However, the answers to many questions in opinion polls are arguably biased by short term events, such as the political business cycle.  Since we are interested in long-term decisions - secessions or unifications - information gathered from surveys or opinion polls may not be the most appropriate.  Nevertheless, we do explore this type of information, and find a strong correlation between distances based on social surveys and genetic distances."

Cultural differences are often the decisive factor in whether a country becomes independent.  After applying the model to the former Yugoslavia, the research team noted:  "Cultural differences, though small, were essential for the country's disintegration. Economic differences, though large, were not enough to cause the breakup of Yugoslavia."

When applied to the Scottish situation, the model predicts that the diverging political culture between Scotland and the rest of the UK will be the key factor leading to Scottish independence.  The model also predicts that Scottish independence is very likely to occur and that Scotland will benefit economically as a result, but does not offer a timetable.

The study will give a further boost to those who argue that Scotland will benefit financially from independence, and directly contradicts those who argue that independence would damage Scotland economically.