Tuesday, 5 June 2018

Growth Commission: Cohort Selection

As a quick exercise I wanted to check how the Growth Commission's "peer group of 12 countries" had been selected. The report offer no explanation at all other than by inference - so I used the same data sources they used to create an objective list of comparable small countries.

My criteria are very simple: countries which qualify as IMF "advanced economies", ranked by size. I've added IMF 2016 GDP/Capita ($US) for comparison purposes as this is the primary measure the Growth Commission use. The highlighted countries are those selected for the Growth Commission's “peer group of the 12 most successful small advanced economies”.

The important point to make here is that this cohort has been pre-screened for success. All of those countries excluded that lie within the population extremes of those selected have lower GDP/Capita than Scotland (and indeed at both the higher and lower end, the population extremes conveniently stop just the right side of examples where GDP/Capita is lower than Scotland's).

There is nothing wrong with this as long as we appreciate that the Growth Commission is seeking to learn from successful small advanced economies. What they are unable to do from the analysis presented is draw any robust conclusions about whether or not small advanced economies are somehow intrinsically more successful than large ones.

It's perhaps unfortunate that in the introduction to the report (p10, 2.28) the Chair Andrew Wilson asserts “The evidence demonstrates that smaller countries, partly because of their greater need to respond to global challenges, produce better governance, policy and therefore living standards.” 

This may or may not be the case, but no such evidence is presented in the report.


Anonymous said...

I don't understand the final column. Shouldn't Scotland be "1"? Why is Denmark "2.9"?

Kevin Hague said...

Hi anonymous - I initially posted a messed up version of the table - corrected within 20 minutes of putting it up but you were there before me!

Table sorted now, thanks for highlighting the error

Anonymous said...

Thank you. Pity all who comment in public about such things are not so conscientious.

What is the source for the Scottish GDP figure?

Unknown said...

I am enjoying the forensic deconstruction of the SGC report by both yourself and Fraser. The Scottish Growth Commission are keen to broadcast there being no growth forecast or assumptions in their report. If that were true (you've proved it's not) how are we meant to measure the efficacy of the recommendations they make? It is ludicrous. "We are the Growth Commission and we've taken two years to claim we have nothing specific to say about future growth" No benchmarks, no targets. We shall make no growth forecast for fear of being branded as over optimistic.

Instead, we shall spin how our simple deficit reduction plan would have panned out over the last 10 years on the basis we exaggerate actual growth by almost 100%. (0.8% to 1.5%) We are quite prepared to grossly misrepresent recent historic growth don't ask us to try and measure or plan for the future.

They had 24 SAE countries to cherry pick from and aside from Australia (who would have bought Scotland being like them?) they chose the group that outperform Scotland and it call it "evidence" small countries perform better. If they were scientists they'd be struck off. In actual fact one of them in the Scottish Finance Minister.

This so called blueprint for Independence is even less credible than the White Paper. "Scotland's Future" plugged the deficit with Oil and Gas revenues, which did actually exist at one time. The SGC have substituted thin air for Oil along with a simple arithmetic formula. No currency solution, no attempt to gauge the economic drag of leaving the UK. Nicola claims the offer is "hope" over "despair". It is actually jump off a cliff with no parachute and hope things will be alright. BTW we are not telling you the height of the cliff!!

Kevin Hague said...

anonymous: Scottish GDP is per GERS adjusted to $US using IMF conversion rate (I get same figure as Growth Commission

L1706 said...

It's also curious that no attempt was made to include political / economic entities for which data is easily available, but which happen to be devolved units of larger countries.

For example, American or Australian states, Canadian provinces. or German Laender.

Wonder why not? (I don't really.)