An independent Catalonia would improve quality of life, says study from Credit Suisse

An independent Catalonia would be totally viable, according to a report conducted by the research institute from the bank, Credit Suisse. In addition it would improve its ranking on the United Nation's Human Development Index (HDI) and reach the 20th position while Spain would drop by three places and reach the 26th position. The report claims that small countries tend to have a higher standard of living due to a number of factors, such as more efficient services, a higher chance of benefitting from globalisation and a more homogenous population. It uses these findings to predict the HDI of territories seeking independence, such as Catalonia, Scotland, Flanders and Quebec.

Catalans would live better in an independent state, says Credit Suisse
Catalans would live better in an independent state, says Credit Suisse / ACN

ACN

August 5, 2014 10:20 PM

Barcelona (ACN).- An independent Catalonia would be totally viable, according to a report conducted by the research institute from the Swiss banking giant, Credit Suisse. In addition, it would improve its ranking on the United Nation's Human Development Index (HDI), a measure of a state's progress calculated through factors related to education, health and income. The report also mentioned that, without Catalonia, Spain's positioning on the index would fall by three places, falling from the 23rd position to the 26th. In the case of independence, Catalonia would rise to the 20th place. The report, entitled The Success of Small States, claims that small countries tend to have a higher standard of living due to a number of factors, such as more efficient services, a higher chance of benefitting from globalisation and a more homogenous population. The report used these findings to predict the HDI of an independent Catalonia, as well as using examples from Scotland, Quebec and Flanders.


A new dimension in the independence debate

The research institute from Credit Suisse comments that, when considering debates related to independence, it is important to ask the question, "Can small, independent states can be successful on their own?" Since 1945, the number of UN member states has increased from 50 to 193, with two thirds having a population of less than ten million people and therefore being considered 'small states', such as the cases of Scotland and Catalonia if they became independent.

The report concludes that small states tend to be more successful than large states in many cases as there appears to be a negative correlation between size and GDP per capita and a positive one between size and wealth inequality. The study also found small countries are spend more on education and healthcare as a percentage of GDP, which are key factors in the long-term success of a country.

This helps to explain why the report predicts that Scotland and Catalonia would attain a higher HDI ranking without their respective "unions".

Catalonia and Scotland rank higher without being part of Spain and the UK

According to Credit Suisse, an independent Quebec would have the highest ranking out of these states, in HDI's 13th place, when Canada currently stands at 11th position in the index. However, in the case of independence, both Catalonia and Scotland would have a higher standard of living than Spain and the UK, respectively. The index currently ranks the UK as 27th, however, should Scotland gain impendence it would fall by three places whilst Scotland would move up to the 23rd position. Likewise, the report predicts that an independent Catalonia would assume a higher position on the index than Spain, France, Finland, Slovenia, Liechtenstein and Italy.

The Human Development Index was developed by the United Nations as a comparative measure which assesses the wealth and the welfare of states, beyond simply taking into account the GDP per capita. As well as economic measurements, the scale considers economic, educational and health factors, such as life expectancy and literacy rate.

Old small countries show a higher HDI ranking

However, Suisse Bank also notes that, in the case of small states within Europe, 'old' countries like Switzerland and Sweden seem to demonstrate better institutional performances that ´new´ countries. This is mainly due to the fact that these countries have had time to develop a more solid institutional and legal framework, and therefore it may take time for new states to uncover the same ´small countries´ benefits.

The report states that old, small countries are therefore often pinpointed as a model for other small nations as they exhibit that "Institutional quality, rule of law, investment in technology and education are key drivers of the ´path´ towards higher output levels".

'The success of small states'

In its recent report, the Swiss bank notes that, within the context of the index, "small countries make up over half of the world's top thirty countries". This is partly because the population of small states tend to be less heterogeneous, which leads to less fragmented services that are more efficient. Moreover, it is cheaper to finance these services in smaller states due to a number of differing factors, such as a higher population density.

Smaller countries are also more likely to feel the positive economic benefits of globalisation and free trade and tend to exhibit less wealth inequality than larger states. Small nations also tend to demonstrate a higher quality in intangible infrastructure, which is "the set of factors that develop human capability and permit the easy and efficient growth of business activity" and focus on the fields of education, governance and the rule of law.

On the other hand, the study from the Swiss bank notes that "corporate tax receipts, size, democracy and intellectual property are much less important factors" in driving the success of small countries.