Trade - Fraser of Allander Institute Blog

Exports and the climate emergency? (an aside)

One interesting aside to recent discussions on the latest export figures for Scotland is the links between exports and emissions.

On the one hand, the Scottish Government are committed to growing Scotland’s international presence through boosting exports.

But as we showed in a companion blog, any realistic attempt to boost exports is likely to require a major shift in manufactured goods.

Exporting services is tricky to do. Firstly, because not all services are simply exportable (think of haircuts or buying a dinner in your favourite restaurant). Secondly, because those services that in theory are exportable – such as banking and professional services – run up against significant barriers in the form of different country-specific laws, tax systems and regulatory regimes.

But boosting manufactured goods and shipping them overseas – all else remaining equal – is likely to raise Scotland’s CO2 emissions.

Why?

Economic statisticians, irony and Scotland’s latest trade statistics

Economists aren’t known for their sense of humour. Economics statisticians less so.

So it was highly ironic – albeit perhaps not very funny – that just two days before the UK’s departure from the EU, analysts in the Scottish Government published their latest annual account of Scottish exports.

As expected, much of the reaction concentrated on the importance of the EU for Scottish trade.

But the statistics also contain interesting information about the pattern of trade from Scotland more generally.

In this blog, we take a look at a couple of these trends, and notably the importance of manufacturing.

Export Action Plan: Agree or disagree on the policy actions of the Scottish Government – this is an excellent piece of evidence based policy making

Today the Scottish Government published a new Export Action Plan, with targets to improve Scotland’s export base over the coming years.

Those with a memory of economic policymaking will recall that this is not the first time the government has set out ambitions to improve Scotland’s export performance.

The most recent target – to grow international exports by 50% between 2010 and 2017 – was missed.

What is refreshing about this Action Plan is the level of analysis that has clearly gone in to informing the decisions that Mr Mckee has taken. This stands in contrast to many past action plans or strategies.

Of course, people will no doubt agree or disagree with the specific policies/priorities put forward. There are also big questions about the level of investment required to meet the outlined ambitions and targets.

But everyone should welcome the new analysis and evidence provided. It marks a significant step forward in our understanding of the challenges and opportunities that Scotland faces in its efforts to boost international trade.

In this blog, we highlight some of the interesting new tools that the action plan includes.

Scottish Exports: Growth in 2017 but target missed

Today the Scottish Government published Export Statistics Scotland, the key source of information on Scottish exports.

In light of the ongoing Brexit uncertainty and the potential risks to Scottish trade patterns, today’s publication offers some interesting insights into the different markets that Scotland sells to, the sectors that are doing well (and those less so) and Scotland’s export performance over the longer-term.

Headline numbers

International exports from Scotland rose by £1.9 billion – or 6.2% – between 2016 and 2017. Note that this is in nominal terms; in real terms the growth was just 0.5%.

Boosted by the competitive value of the pound and strong growth on the continent in 2017 – where the Euro Area economy grew at its fastest rate since 2007 – the improvement in Scottish exports was driven by a £1.7bn increase in exports to the EU. This was equivalent to a 13.3% rise between 2016 and 2017.

Scotland’s exports to the rest of the UK also increased in 2017, up £2.2 billion (4.6%).

The Scottish Government’s Economic Strategy had a target to grow Scottish international exports by 50% by 2017 (on a 2010 baseline). Despite today’s uplift, the figures confirm that this target has been missed, with international exports up by around 35% since 2010.Continue reading

The gains from economic integration: The EU has still a long way to go

David Comerford, Chancellor’s Fellow, Fraser of Allander Institute, Department of Economics, University of Strathclyde

Sevi Rodriguez Mora, Professor of Economics, University of Edinburgh; CEPR Research Fellow

First published on VoxEU.org at: https://voxeu.org/article/gains-economic-integration-eu

Summary

Populists in Europe are contesting the perceived benefits of economic integration between countries. This column uses data on trade frictions to estimate the long-run impact of trade frictions on GDP if countries in Europe were to be more or less integrated. Negative between-country impacts, such as from Brexit or an EU collapse, imply a GDP reduction of between 1-3%. The potential trade benefits of a ‘United States of Europe’, on the other hand, may be an order of magnitude greater for its members.