Friday, March 14, 2014

Scale of Scotland's economy

Now that we live in Scotland, we're immersed in the minutiae of daily life. But I want to raise my head up occasionally and keep an eye on the bigger picture of the country as a whole.

Earlier this week, I came across a couple of short articles in the Washington Post about the size of the economies of large U.S. cities. More about that in a minute. The articles, however, made me think about the size of Scotland's economy.

According to projections, Scotland's gross domestic product (GDP) for 2014 will be $250 billion. For the U.K. as a whole, the 2014 estimated GDP is ~ $2.5 trillion. Thus, Scotland produces roughly 10% of the GDP for the U.K.

If Scotland were its own country, its GDP would rank somewhere around 38th in the world. That's actually quite high, considering its small population of approximately 5.3 million people. Compared to other European countries, Scotland's GDP would rank roughly 15th, fairly equivalent with Finland and well ahead of countries such as Portugal and Ireland. Again, in relation to the size of its population, Scotland punches above its weight -- e.g., Ireland has about a million more people, and Portugal's population is almost twice that of Scotland.

The public entrance to the Scottish Parliament Building. (And, yes, it is quite an unusual building.)
To better understand the scale of Scotland's economy, however, you must compare its GDP with major economic powers. Quite simply, Scotland's economy is tiny in comparison. If the U.K. no longer had Scotland, its GDP would still be roughly $2.25 trillion. The estimated 2014 GDPs for France and Germany are $2.8 trillion and $3.7 trillion, respectively. Japan's projected 2014 GDP is roughly $5.2 trillion, while China's is $9.7 trillion.

The U.S. economy, of course, dwarfs all others (for now). For 2014, the U.S. has an estimated GDP of $17.4 trillion. The federal government's 2013 budget -- remember, this is only the federal government's largesse, and doesn't include any state spending -- was $3.8 trillion. (I won't bother to go on a rant about how U.S. federal government revenues in 2013 were only $2.9 trillion.) By comparison, Scotland's 2014 budget is around $30 billion.

If Scotland were a U.S. state, its GDP would place roughly 25th in size, behind Connecticut and ahead of Oregon.

Most striking, to me, is comparing Scotland's economy with individual U.S. cities. Or, more accurately put, with U.S. metropolitan areas. For example, the GDP of the New York City metropolitan area is roughly $1.4 trillion, and if it were a country it would be the 13th largest economy in the world, behind Australia and ahead of Spain. The Los Angeles metropolitan area's GDP is approximately $830 billion, ranking about 18th in the world.

According to data collected by the U.S. Conference of Mayors, a GDP of $250 billion for Scotland ranks it behind 12 metropolitan areas in the United States, a fair bit behind Seattle/Tacoma at $281 billion. If you aggregate the economic activity in approximately 20 U.S. metropolitan areas, you get about half of the U.S.'s total economic output. Take a look at this map, which the Washington Post took from a Reddit user (Alexandr Trubetskoy):

This kinda sorta blows my mind.
I haven't come across any hard data on the Glasgow metropolitan area's economic output, but I regularly see it described as producing approximately one-sixth of Scotland's economy (with Edinburgh a slightly smaller percentage behind). That means Glasgow's GDP should be roughly $41.7 billion. Its closest equivalent in the States would be New Haven, Connecticut, ranking roughly 60th in the U.S.

While Glasgow is Scotland's biggest city and largest economic engine, in scale the metropolitan area's economy is equivalent to a middling U.S. city, such as Albuquerque, New Mexico ($41.5 billion) or Madison, Wisconsin ($40.9 billion).

Getting a sense of that scale helps me keep in perspective the level of resources available to the Glasgow, and to Scotland as a whole. It also reminds me of the tremendous economic wealth and power enjoyed by the United States. As an expat, understanding the scale of things -- economy, population, geography, length of history, etc. -- helps me gain insight into my home country and my new host country.

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