I would like to respond to Doug Maughan (Letters, February 13) on my letter (February 9): he questions my example of the US's current prosperity and the usefulness of tax reductions in spurring economic growth. According to the latest, and most reliable, World Bank (PPP weighted) GDP per capita listings, Luxembourg is number one in the world rankings and the US second. Economists tend to ignore Luxembourg in any meaningful cross-country comparison, given its tiny population (around the same size as Edinburgh). But whether we include Luxembourg or not, the US is still at the top of the GDP per capita pile, as I said, and not at the same level as a number of emerging market countries such as Mexico, which it would have been, and which was my point, had it underperformed like Scotland in growth terms over the long run.
Secondly, I am challenged about how the control of taxes by the Scottish Parliament would improve Scotland's growth rate. Luxembourg is a good example of a country that has exploited its tax levers to its own advantage to be at the number one position in the GDP per capita rankings. Specifically, it has exploited differential VAT rates, relative to its trading partners, to grow its financial services sector, thereby compensating for the decline in its manufacturing sector. Given that Luxembourg is at the heart of one of the largest agglomorations of industry on the planet and, therefore, does not suffer from many of the frictional disadvantages of Scotland, it underscores the point that Scotland needs the devolution of fiscal powers to restore its comparative advantage.
Given that all parties in Scotland are arguing for devolved tax powers to the Scottish Parliament, I fail to see how my arguments for the devolution of such powers make me a "Nationalist-leaning" academic. I would have thought people of all persuasions would want Scotland to prosper through the creation of a competitive and incentivised environment, much as the residents of Luxembourg, Switzerland and other countries have benefited from such an environment.
Ronald MacDonald, Adam Smith Professor of Political Economy, University of Glasgow.
We are told Irish GDP per capita is $49,220 and the UK's in $36,830, which translates as 10 places above the UK in international comparisons, but Ireland has a cost of living that is 11 places below the UK.
On the UN human development index, Ireland is fourth, with the UK trailing in 17th. As The Herald points out, 18% of Ireland's exports go to the US, but just behind is the UK - destination for 17% of Irish exports. However, 31% of Ireland's imports come from the UK, more than double the US.
This means many UK jobs are dependent on a successful Irish economy. Therefore, Ireland's independence has been good for London and Dublin. Similarly, Scottish independence will be win-win.
Finally, there is no political party in Ireland wanting to destroy its advantages by returning decision-making to London.
Angus B MacNeil, MP, Scottish National Party, 31 Bayhead, Stornoway, Isle of Lewis.
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