By the GDP measure, Scottish government data gives every Scottish citizen an amount of $39,600 per head. As Salmond argues, that puts Scotland comfortably ahead of the UK in the OECD rankings – the UK comes 17th at $34,800 per head - and above other major economies such as France and Japan, based on 2012 figures. But that ranking has been challenged by the study by University of Glasgow economists John McLaren and Jo Armstrong. Drawing on their previous work at the Centre for Public Policy for Regions, they confirm that the wealth actually held in Scotland – its national income – is lower, and that makes a significant difference to Scotland’s rankings and standard of living.
Using gross national income (GNI) – a more accurate measure of wealth, which assesses the money kept inside a country, rather than GDP, which measures overall economic output – Scotland’s actual wealth per head slips by $2,000 to $37,400. However, it falls by about $5,000 to $34,600 using a more robust alternative measure, as applied by McLaren and Armstrong, whose methodology includes discounting the profits and share dividends earned by foreign companies. Scotland is a prosperous country, with significant natural resources and industries, but the high level of external ownership in key industries has reduced the wealth held in Scottish hands. That means that while Scotland’s GDP was £144.7bn in 2012, its GNI, using the lower alternative measure, was £125.5bn.Not likely to grab hearts and minds, but interesting, I think?