INDEPENDENCE OF CATALONIA:
by Xavier Sala-i-Martin, Columbia University and UPF
Translated by Eva Guler
(Translation NOT supervised -and therefore NOT endorsed- by Xavier
(Translation NOT supervised -and therefore NOT endorsed- by Xavier Sala-i-Martin)
* THIS SCRIPT HAS BEEN PREPARED FOR A CONFERENCE AT THE OMMIUM CULTURAL *
Once upon a time, there was a country
with a 6 million population, with an area of 40,000 square kilometres.
The country had as next door neighbours two big European powers,
traditionally colonists, whose languages were a constant threat to the existence
of the local language. The
auto-governed population was being forced to speak and use two (or more)
languages. The per capita growth of
this country was high, one of the highest of the world, a complete economic
Is this science fiction or reality?
When we speak about the potential
independence of Catalonia, the first question that a non-economist individual
would ask me (being an economist myself) is whether Catalonia would be "viable" as an independent nation. If
Catalonia were not, the description on the
first paragraph would be science fiction.
But, the country I described above is a
country that exists ... and it is independent: It is called Switzerland.
Switzerland has a 6 million population
(exactly like Catalonia) and approximately 40,000 square kilometres (exactly
Switzerland borders with Germany and France, two European powers,
traditionally colonists and the local language, the Swiss-German (which is
different to German) is being threatened by the French and German languages (and
Italian as well, which is spoken by a very small minority in the south of the
country). So, before we even begin
to talk, you can see that the arguments given against the viability of Catalonia
as an independent nation are basically erroneous: if Switzerland is viable (and
not only it is but it is also the second richest country of the world) why
couldn’t Catalonia be? Moreover, Switzerland is located up in a range of mountains,
has a no sea port and it has a complicated access to the rest of the world .
In this text, I will analyse
the arguments that the anti-independentists use to demonstrate that Catalonia is
not viable as an independent country.
The most common argument is “Catalonia
is too small to be able to become an independent nation”.
The truth is that no serious economist can agree with this statement.
There is no economic theory that says that a country must be of a minimum size
to be viable or that bigger countries in size are more viable than small ones.
If this theory existed, it would be totally wrong because, in the world we live
in, the expenditure per capita or the economic growth rate of a country is not related to the size of a country (measured, for example, by area and/or
population). It is simply not true that larger countries are more economically
successful. Notice that large
countries like China, India and Russia and among
the poorest countries in the world (although the first two have now a large
growth rate), and that Belgium, Holland and Switzerland are among
the richest. The correlation between size and wealth in the data is zero,
are among the richest. The correlation between size and wealth in the data is zero,a phenomenon that economists call "Absence Scale Effects"
Another argument against independence is
that “a country can not prosper without
natural resources like land, gas or petroleum, and Catalonia doesn’t have
any”. This theory is also
completely false. For example,
Japan or the miraculous Asian "tigers” (Hong Kong, Taiwan, South
Korea and Singapore) do not have natural resources or lots of fertile land. Their
growth rate over the last few decades, however, has
spectacular. (1) And besides, using this as an argument in favor of
Catalonia being part of Spain is ridiculous given that Spain does not have these
natural resources either!
And besides, using this as an argument in favor of Catalonia being part of Spain is ridiculous given that Spain does not have these natural resources either!
Moreover, some economists argue that natural resources
not only are not beneficial but they can be detrimental to economic performance. The argument can be summarised
as follows: countries with natural resources
use a lo t of resources to develop them and, in so doing, they reduce the
resources used up in other sectors. This
tends to hurt more dynamic sectors that are tied to innovation and technological
progress, the sectors that generate the technological progress that guarantee long-term growth.
So, natural-resource-rich countries end up by being poorer. The typical examples of countries that have suffered from
this (a phenomenon that economists call “Dutch Decease” or the "Natural Resource
Curse") are Mexico and especially Venezuela, countries that
have become poorer after discovering rich petroleum banks. This natural
resource curse has been widely documented by empirical economists.
This natural resource curse has been widely documented by empirical economists.
Having said this, it seems obvious that
for an economy to grow it needs to use natural resources. But this, of course,
does not mean that it needs to produce them. The alternative, of course, is to
buy them from abroad. In this sense, being part of a small country may be
beneficial because the government has little incentive to put trade barriers
that are harmful to the economy.
A third argument against the economic
viability of Catalonia is the following: “Isn’t
it enough to compete with Paris, London, New York or Hong Kong, that now you
also want to compete with Madrid”? This
statement is also totally wrong. Catalonian
businesses are already competing with the ones in Spain. The
interregional competition is as big as the international one.
Who does the reader think the Costa Brava hotels compete with? They
compete with the Italian hotels, the Moroccan hotels and the Greek hotels, but
the biggest competition comes from Spanish hotels in the south of Spain (Costa
del Sol) and even from hotels from the coast of Tarragona (Costa Dorada) which
are in the same Catalonian community.
So, the independence of Catalonia, would
not bring a very substantial increase in competition to the one we already face.
And if, there was an increase, it would be favourable: as an
economist and as a consumer, I always applaud new competition: it brings better quality and lower prices.
And that is very good.
And that is very good.
Other people argue that “
to leave Spain would be suicidal because Spain is our biggest market for the
Catalonian businesses”. But
the question is: Why? Why do the Spanish people buy our own cava and spend
their summer holidays in the Costa Brava? Because
they love us?
Or because given the price and quality of our product, that is the
best they can do? If the answer is this last one,
and if independence does not affect the price and
quality we offer now, then the Catalonian markets would not lose. Perhaps
it would lose in the short term because of boycotts, but boycotts are hard to
maintain in the long run because they are expensive to the boycotter (that is,
the Spanish boycotters would have to buy more expensive French Champagne and
would all have to crowd in Marbella during their summer vacations; They might
want to sacrifice for one or two years, but in the long run, they would do what
is best for them and for their pocket and the boycott would gradually
disappear). Having said this it is certainly true Try to sell this one in Mexico!
Perhaps it would lose in the short term because of boycotts, but boycotts are hard to maintain in the long run because they are expensive to the boycotter (that is, the Spanish boycotters would have to buy more expensive French Champagne and would all have to crowd in Marbella during their summer vacations; They might want to sacrifice for one or two years, but in the long run, they would do what is best for them and for their pocket and the boycott would gradually disappear). Having said this it is certainly truethat the biggest international market tends to be the neighbouring country. The biggest market for Mexico is the United States of America. The biggest market for Taiwan is China and the biggest market for France is Germany. The question is whether this implies, as the Spanish anti-catalanists say, that Catalunya should not be an independent state. In other words, does the fact that the largest market for Mexico is the U.S.A. is a good argument for Mexico to become the 51st state of the United States?
Try to sell this one in Mexico!
Another argument against independence is
dissolution of countries at the present time, is
against the current trend in a time when Europe is nearing a one common
currency, a one fiscal system, a one military unit and a one political unit.
To speak about separatism and independence at the end of the 20th
century is old-fashion and it is out of tone”. I think that this quote is not acceptable for several
reasons. First, it is not true that
the trend at the end of the 20th century is to have fewer and larger
countries. Quite the opposite: the number of countries in the world is
increasing and has been increasing over the last 50 years. In 1946 there were 74 countries
in the world and in 1995 there were 192.
Hence, the empirical premise of this argument is simply false. Second,
the theory is based on the presumption that Europe as a political unit
is desirable. Personally,
I have enormous doubts about the desirability of European political (I repeat,
political) unit, based on the creation
of one bureaucratic superstructure
(interestingly, the Spanish nationalists that criticize catalanists do
also object giving up Spanish political independence in favor of
Europe!). And third, even if a European political union were desirable, it does
not follow logically that this is a good argument suggesting that Catalonia
should be part of Spain (as opposed to another region in Europe).
Finally, the most feared argument: “to
obtain the independence, we need a war and this would be more costly that any
other economic benefit that you could get out of it; can’t you see what
happened in Bosnia with the disintegration of the old Yugoslavia”?.
This is half true and half false. It’s
true that the independence is not wanted (by me or by anyone else that I know
of) if the price we have to pay to obtain
it is a war. I do not think that the gains
from independence are worth a single human life. But what it is not
true is that the only way of obtaining independence would be trough war.
Historically there has been three ways of drawing political borders: war,
monarchic marriages, and peaceful referendums. Monarchic marriages
are no longer used to draw political borders.
Wars of independence, on the
contrary, are still being used. The latest tendency during the 20th century has
been peaceful separation: from Sweden and Norway, to the Check Republic, Slovakia, Estonia,
Leetonia, Lithuania and many more old soviet republics, the preferred means of
achieving independence is a peaceful democratic referendum.
Economic progress is gained by a
creative population willing to work, a legal system that guarantees investors
property rights, incentives to companies to innovate and to adopt new
technology. An educational system which helps the population to be more
productive and a good government who encourages internal and external trading
and never sinks a productive economy with excessive taxes, with a fair
bureaucracy and intolerable corruption and maintains a fiscal and monetary
stability. From this point of view,
the independence would not be positive if a Catalan state could not fulfil the
above points or if its performance on these areas were worse than the current
performance of the Spanish state. Today we do not know
how a Catalonian state would do it. What
we know for sure is how the Spanish state is currently performing. And
the truth is that the performance is not stellar.
It has been argued that, as time goes
by, the desirability of having smaller nations increases. And the economists who
say so are not (I repeat, NOT) some crazy Catalan nationalists. They are Harvard University professors
Alberto Alesina, and Robert Barro and Stanford University professor Romain Wacziar.
have demonstrated that the 20th century trends of increasing trade
and globalization explain empirically the increase in the number of countries
that we have witnessed during the second half of the century. The reason?
The reason?The growth in international trade and globalization makes it less desirable to belong to a larger political union like Spain. As globalization progresses, the need of one's industry to depend on a large local market is reduced. The gains from being small, on the other hand, remain the same. Hence, the optimal size of a country is reduced. Again, the scientists that say that are not radical catalan independentists, they are Italian, American, and French professors from Harvard and Stanford.
1. And this is true even when we take into account the financial crisis that some (not all) of them countries have been trough recently.