The Myth of the ‘Mighty Minnows’
by Dr Alison Smith
Nationalist movements often argue that small countries are more economically successful than big ones. The Scottish Nationalist Party claims that independence would allow Scotland to advance from ‘its subordinate position within the UK, and generate a new prosperity for Scotland.’ And former Plaid Cymru MP, Adam Price, who is currently taking a career break at Harvard University, goes further,wrapping the ‘small equals rich’ argument in a cloak of pseudo-academic jargon.
Price’s article, published in an on-line student journal, is entitled ‘Small is Cute, Sexy and Successful’. He argues that smaller countries grow faster because they are more open to trade, more socially cohesive and more adaptable. Rather optimistically, Price even argues that differences in population size alone account for ‘mighty minnows’ outperforming the big five (UK, Italy, Germany, France and Spain) between 1997 and 2007. Furthermore, he argues that small countries did no worse than large countries when financial catastrophe hit in 2008, concluding that a ‘rising tide lifts small boats faster, it seems, but they are no more likely to sink in a storm.’
Although ‘Small is Cute’ is littered with academic terminology, Price’s analysis lacks any pretence of scholarly rigour. He jumps between different sets of countries and different time frames, cherry-picking examples from the six original Coal and Steel Community states, the EU15 and the EU27. Sometimes he presents data from 1979-2007, and sometimes he presents figures from 1996-2009. He is rarely clear about which data set is being referenced.
His arguments are also weak. The Bosnians and the Belgians may be interested to hear that small countries are more cohesive than big ones. But Price’s most naïve contention of all is that small, export-driven countries fare no worse than larger countries in hard times. In reality, the very reliance of small countries on trade, much vaunted by Price, leaves them particularly vulnerable to downturns in the global economy.
Latvia’s GDP plummeted by 18% in 2009.
The Lithuanian economy shrank by 15% in 2009.
Estonia’s economy contracted by 13.9% in 2009.
In the same year, Slovenia lost 7.3% of its GDP, Ireland’s economy shrank by 7%, Iceland’s by 6.8% and Hungary’s by 6.7%.
Unable to access credit on bond markets, many of these countries were forced to accept IMF bailouts in exchange for blistering austerity measures. Far from enjoying prosperity, these countries are still straining for any glimpse of recovery on the horizon.
So, Adam Price’s article is nine parts polemic and one part academic, and talk of ‘mighty minnows’ is mere wishful thinking.