New Wealth for Old Nations

University Press. All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher, except for reading and browsing via the World Wide Web. Users are not permitted to mount this file on any network servers. Introduction This book asks how to improve growth in a small economy, specifically growth in advanced industrial regions and nations which also have a commitment to social justice and sustainability. The case study is Scotland. To paraphrase Adam Smith, one of the country's most famous sons, the task is to identify sources of new wealth for old nations. The challenge of understanding what makes economies grow, and how governments can help or hinder, is hardly new; but contemporary challenges provided the impetus for this book. First, how do the long-standing EU members compete after the Union's enlargement in 2004? Secondly, what forces drive growth in small economies, whether a sovereign state or a region? This question is particularly pertinent now Europe has a common monetary policy and growing pressures for greater fiscal coordination, and is relevant everywhere because of the impact of globalization in intensifying competition with much lower cost locations. For these reasons, there is a renewed interest in what local levers can affect growth. Our contributors focus on Scotland but their policy prescriptions demonstrate just how general are the political economy challenges for any advanced, industrial region. Aims of the Book We asked the contributors to consider three themes. The first is simply growth: what enhances and what limits the growth rate? The second is opportunity: in a small country like Scotland, with just over five million people and an essentially social democratic political consensus, what is the nature of the trade-off between growth and fairness, and can its terms be improved? The third theme is governance: how can the productivity of the public sector be improved and how can a consensus for policy change be developed and implemented? The book regards the need for a specific commitment to growth as a policy priority in Scotland, where recent growth rates have been mediocre in international terms (see Chapter 1). Such a growth priority has wide relevance in many developed economies exhibiting sluggish performance in the recent past. All now face the challenges posed by ageing, static or declining populations …