The Political Economy of Inter-Regional Fiscal Flows
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The Political Economy of Inter-Regional Fiscal Flows

Measurement, Determinants and Effects on Country Stability

Edited by Núria Bosch, Marta Espasa and Albert Solé Ollé

Struggles over what a region receives, or should receive, from the budget of the central government are common to many countries. Discussions often focus on the measures of ‘net fiscal flows’ or ‘fiscal balances’ provided by the government or other actors. This unique book shows just how these flows are computed then interpreted and clarifies the often misunderstood economic and political motives that explain why some regions receive more monies than others.
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Chapter 16: Staying Together? Scotland and the Rest of the United Kingdom

David Bell


David Bell 1 INTRODUCTION Scotland’s sense of identity has survived more than three centuries of union with the rest of the UK. It has waxed and waned during periods of war and peace, growth and recession. But recent developments mark a significant change from this experience: in the latter part of the first decade of the new millennium, support for the nationalist party has grown sufficiently to allow it to form a minority government within the recently revived Scottish Parliament. Scotland now has a government which intends to dismantle the United Kingdom. Economic considerations play a large part in the arguments that are deployed in favour or against this policy. This chapter reviews such arguments: they will have an important bearing on the possibility that Scotland secedes from the rest of the UK (RUK). It also describes the economic forces binding the UK together. It is organised in three main sections. In the first, we describe the history of nationalism in Scotland. Next we describe the economic ties between Scotland and RUK. Finally, we look at where different constitutional futures might take the United Kingdom. 2 HISTORY OF NATIONALISM IN SCOTLAND Scotland became part of the United Kingdom in 1707, as a result of the Act of Union which abolished the separate English and Scottish Parliaments. Though bitterly resented by many Scots politicians and most of the people, the Act of Union was fundamentally driven by economics. Some of this was personal – in the form of bribes given to key...

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