On 18 September, the people of Scotland will vote on whether their country should become independent of the UK. This article is part of our "Four futures for an independent Scotland" special report, looking at the choices a newly independent Scotland could make
SMALL nations can shape their own destiny, and this can be both a blessing and a curse. If the Scots opt for independence, they would do well to heed other small nations before them.
Research by the innovation-fostering charity Nesta has looked at small countries that have prospered in the last few decades. Take tiny Estonia, with a population one-quarter the size of Scotland's. It is the poster child for newly independent states. Estonia's government took advantage of freedom from the USSR in 1991 to turn the country into a technology superpower in miniature. From the free public Wi-Fi in Tallinn to compulsory coding lessons in schools, Estonia bet big on IT. And it paid off: Estonians built the technology behind Skype and run a host of cool start-ups.
But for every Estonia there's an Iceland. Around the time the Estonians embarked on their technological adventure, the Icelanders set themselves up as the buccaneers of international capitalism. It ended badly, with the country's banks collapsing and the country facing years of painful austerity.
So an independent Scotland must choose its path carefully. There are a number of directions it could decide on: oil-investment paradise, renewable-energy Mecca, high-tech playground.
None of these three scenarios is a sure-fire hit. High-tech industries could always go the way of "Silicon Glen", a region in central Scotland where electronics manufacturers once flocked. In its heyday in the mid-1990s, it was claimed that Silicon Glen produced 35 per cent of PCs in western Europe. But this success vanished almost overnight when the dotcom bubble burst and companies headed east in search of lower costs.
Such scenarios are plausible futures for Scotland, and there is also a fourth future; one that is more troubling. Without a plan or a sense of where to take the nation, it is possible that an independent Scotland may drift into business-as-usual. Or perhaps from an economic point of view, it would be more accurate to call this business-and-financial-services-as-usual – the time-honoured British model of an economy run by bankers, built on debt and managed to the timetable of the quarterly financial results.
As the experience of Iceland and the Republic of Ireland shows, this is a perilous path, especially for a small country. It's partly about risk: as we have seen, the financial services sector can act as an engine for the economy, but it has a nasty habit of blowing up on the motorway.
There is also something deeper at stake: if Scotland makes the wrong decisions about its own economic future, it risks ending up as a backwater to the rest of the UK, with England – and London in particular – sucking away its brightest and best.
Independence offers a chance for Scotland to shape its destiny, but whatever future it aims for, it must avoid clinging to the old British habit of muddling through.
Read more: "Four futures for an independent Scotland"
This article appeared in print under the headline "Take the high road?"
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Stian Westlake is executive director of research at Nesta in London. Nesta's report, When Small is Beautiful: Successful innovation in smaller countries, will be published on 30 June
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