The viability of an independent Catalonia

The Case for Catalonia's Secession from Spain.
By Josep Desquens / The Bologna Center Journal of International Affairs


Many Catalans do not support secession because they believe that it would not be economically viable. Yet thus far, there are no convincing arguments to support such a statement.

The argument that Catalonia is too small to be an economically sustainable independent state is incorrect. Not only is there no serious economic theory arguing that a country's economic success requires a minimum size, but the evidence suggests a different reality. Looking at the ten countries with the highest GDP per person in the world shows that the Catalan proverb "the good marmalade is in the small pot" is applicable to economics: Eight out of the ten richest countries in the world (measured by GDP per capita) have a population equal or lower to that of Catalonia's six and a half million inhabitants. Another element of the economic inviability speech refers to the availability of natural resources: An independent Catalonia will not be able to prosper because it does not have sufficient natural resources. Again, this logic is flawed.

There is no established correlation between natural resources and economic prosperity: Though there are examples supporting this relationship, such as Norway; there are others refuting it. Oil-rich Venezuela has proved that abundant resources can lead to economic disaster if improperly managed, while a relatively poor country in terms of resources, such as Japan, is one of the richest in the world. The use of natural resources is indispensable for economic development and a country that wants to grow will need to obtain them. The way to do so efficiently is through international trade, not giving up political independence to a larger country.

A central theme in the anti-secessionist economic discourse is based on the fact that Spain is the main market of Catalonia. Thus, seceding from Spain would result in an economic catastrophe because Catalonia would lose its main market. The flaw in this argument is that there is no reason to expect Spanish trade embargoes or a boycott of Catalan products, particularly in the E.U. context. Secondly, Spanish citizens buy Catalan products due to their quality and price and not for some abstract Spanish national solidarity. Therefore, as long as secession does not increase the prices or lower the quality of Catalan products, no loss of market should occur. Finally, this argument overlooks an important reality: It is normal for a country that its main market is a neighboring country, particularly in the case of small countries. The Netherlands and Denmark's largest trading partner is Germany; Belgium's is France; Portugal's largest market is Spain, yet there is no suggestion that Portugal reunite with Spain.

Critics of secession can rightly argue that being part of Spain makes economic sense because it allows Catalonia to share the costs of public goods of the military, diplomatic representations, etc, among forty million people instead of six and a half million. Although this is undeniable, it overlooks two facts. First, the huge regional fiscal imbalance shows that today Catalans are paying for these services twice what they would pay in a separate Catalan state. Second, the cost of some of these public goods (e.g. monetary system, antitrust regulation) is being transferred to the E.U. supranational level (i.e. financed by all E.U. citizens).

In conclusion, there is no objective economic reason to believe that a hypothetical Catalan state should not be viable from an economic perspective. If Slovenia has performed well since seceding from Yugoslavia with its much smaller and less diversified post-communist economy, an independent Catalonia should also be able to do well economically. In the end, the success of a Catalan state will depend on its own government. Independence will be good for Catalans only if the Catalan state would be able to pursue sound macroeconomic policies that foster growth and economic welfare. While it is uncertain how well a Catalan government could manage its economy, we know that the performance of the Spanish government over the last century has been overall poor. Moreover, as independence would mean getting rid of the aforementioned fiscal imbalance with Spain at once, a Catalan state would enjoy significant room to maneuver.