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  • Ian Ritchie : Scottish Business Insider

Scotland risks irrelevance after independence

A RECENT VISIT TO New Zealand gave the opportunity to observe how a small independent country exists in the modern global economy – much of which seems relevant to how Scotland might also fare if we were to break free from the UK.

New Zealand, with 4.5m residents, is a bit less populous than Scotland, but the land it occupies is equivalent to that of the entire UK, which makes it quite spread out. Just like Scotland, it is a country of highlands and islands, has useful reserves of oil and gas, and exploits some renewable energy sources of hydro - and also, in their case, geothermal - power.

It all feels a bit like a parallel universe: cars drive on the left, Graham Norton is on the TV on Friday nights, Jonathan Ross on Saturday, and Top Gear on Sunday. Chinese and Indian carry-outs vie with Fish and Chip shops for informal eating. There is even a TV channel, Maori TV, which like BBC Alba, nobody actually watches.

Infrastructure, however, is quite poor: there is no motorway system to speak of, and no intercity railway network, so getting from place to place is normally done by long car journeys on two-way roads, or via flights to regional airports. Broadband, however, is widely deployed and is being upgraded to fibre throughout the country.

New Zealand was forced to cut many of its ties to the UK in 1973 in the wake of Britain’s entry to the European Common Market. Protected markets for Lamb and Butter disappeared overnight and the economy of the country had to be restructured.

Since then new world markets have been developed for dairy, kiwi fruit, and wine. However the economy is still stubbornly agricultural, which limits the amount of value-added economic benefit that can be obtained.

Not surprisingly, the New Zealand Government has identified knowledge-based businesses as the future of their economy, but most businesses, as in Scotland, remain small and don’t export much.

As here, the stock market is dominated by privatised utilities.

The University of Auckland is one of the world’s top 100 universities - Scotland has three - and the Director of Entrepreneurial Studies there, Geoff Whitcher, says that the attitude of the University researchers towards industrial cooperation has been transformed in recent years and that they are now much more engaged in economic development.

There are very few international high-technology stars. One such is WETA, the film special effects studio founded by Peter Jackson and extensively used in the production of his three Oscar-winning ‘Lord of the Rings’ films. WETA now employs several hundred specialists from all over the world at its HQ in Wellington, and is a global leader in its field.

Like Whitcher, Brett O’Riley, who heads up Business Innovation and Investment for the New Zealand Government, was recruited from the private sector, a development that could be usefully copied in Scotland, where industrial experience is not often used in government or academia.

All in all though, it is a small country, dominated by a much bigger economy, Australia, next door, and the brightest and the best of their young people are inevitably attracted off to work in places like Sydney, Hong Kong, London or the USA. Just as in Scotland, it is very difficult to build a corporate career without leaving the country.

But the overwhelming feeling is that of global irrelevance; New Zealand doesn’t feel like an important country and lacks self confidence. Despite the bluster of the SNP, Scots will need to consider how we might avoid the same fate.

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