Col·lectiu Emma - Explaining Catalonia

Thursday, 23 june 2011 | Financial Times

English

"Too bleak vision of Catalan secession" (published reply at the Financial Times)

(Fa uns dies el professor de l'IESE Pankaj Ghemawat va publicar l'article "The ties that bind Catalonia" on donava arguments econòmics més que discutibles sobre la independència de Catalunya; els professors de la UPF Xavier Cuadras-Morató i Modest Guinjoan, autors del llibre "Sense Espanya" han enviat la següent resposta que ha estat publicada al Finacial Times: "Too bleak vision of Catalan secession").

Professor Pankaj Ghemawat presents a rather bleak vision of what might happen to the Catalan economy after a secession from Spain (“The ties that bind Catalonia”, June 17th, 2011). A 7 per cent reduction of GDP is not a minor bruise. Nevertheless, he fails to mention that Catalonia’s net fiscal transfers to the rest of Spain stand somewhere between 8,7 and 9,8 per cent of GDP. Apart from this, we would like to make three additional points:


First, Professor Ghemawat hypothesis of a two thirds drop in trade intensity between Catalonia and Spain is based on results from research on the effects of independence on post-colonial trade. Yet, it is hard to draw any parallels between colonial empires episodes throughout XXth century and Catalonia today and, therefore, this figure should be taken with great caution.
 
Second, our own research on the consequences of secession is focused on a trade boycott in the Spanish markets against Catalan products, probably the main potential cause of a reduction of trade. According to our conclusions the boycott needed to cause a 7 per cent drop of GDP is much higher than what could be reasonably expected.
 
Third, the negative consequences of the reduction of trade on Catalan GDP should be considered an upper bound. Any reasonable macroeconomic model will tell you that output is determined in the medium run by the usual factors (availability of labour, human and physical capital, infrastructures, etc). Thus, it seems more important for a secessionist country to make sure these factors will continue in place, rather than keeping the commercial ties with former partners. Given the relationship between some of these factors and public expenditures, the elimination of the net fiscal transfer would increase not only Catalonia’s income in the short run, but its growth prospects in the medium run.
 
Xavier Cuadras-Morató and Modest Guinjoan are Associate Professor and Lecturer at Universitat Pompeu Fabra (Barcelona) and authors of the book “Sense Espanya. Balanç econòmic de la independència”, 2011 (Ed. Pòrtic).


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Col·lectiu Emma - Explaining Catalonia

Col·lectiu Emma is a network of Catalans and non-Catalans living in different countries who have made it their job to track and review news reports about Catalonia in the international media. Our goal is to ensure that the world's public opinion gets a fair picture of the country's reality today and in history.

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Col·lectiu Emma - Explaining Catalonia