By Julia Calvert

The latest announcement from the Scottish Government regarding Indyref2 raises complex questions about the country’s future on the world stage.

Some of the more contentious questions surround Scotland’s role in promoting international development.

Two difficult issues await policymakers in defining the country’s development agenda in the wake of a pro-independence vote: First, what can the country afford? And second, will policy lean towards self-preservation, or will Scotland seek to establish itself as a moral front-runner in promoting sustainable development beyond its borders?

The United Nations has set a target for advanced economies to spend 0.7% of their gross national income (GNI) on official development assistance (ODA).

The benchmark was set in 1970s as a compromise between world-leading economists and politicians. Economists estimated that governments would need to redirect at least 1% of global capital flows to low- and middle-income countries to ignite self-sustained growth there.

Politicians preferred a lower target and a nonbinding commitment. As a result, the UN called on governments to exert their ‘best efforts’ in meeting the goal.

The target has since been endorsed by numerous international organisations and think tanks but it has only been met by a handful of countries in practice.

Norway, Sweden, and Denmark have met the goal consistently since the 1970s. The Netherlands did too until 2012. The UK met the target for the first time in 2013 and then established it as a government prerogative in the 2015 International Development Act.

UK ODA spending fell in 2021 to 0.5% GNI due to the pandemic recovery. It is expected that the UK government will not return to the 0.7% target until at least 2023/24.  

How realistic is the 0.7% target for an independent Scotland? The most recent government estimate (2017) places Scotland’s GNI at £159.3bn.

Scotland would therefore need to spend roughly £1.115bn on development assistance each year. That’s close to what Scotland spends on its own economic development (£1.285bn according to 2017 data), one third of national defence spending (£3.182bn), less than a tenth of public health spending (£12.830bn pre-pandemic), and almost 5% of spending on social protection (£23.556bn).

However, the short answer to the question of affordability is yes, Scotland can afford to meet the target so long as Scots are willing to redirect funds from other priorities or go into further government debt.

In the grand scheme of government expenditure, £1.115bn could be absorbed through a redistribution or expansion of government spending. Given this (important) caveat, there is also a longer, more complicated answer.  

What Scots would have to sacrifice to meet 0.7% will depend on several factors, including the succession arrangement with London, the public appetite for tax increases, and domestic economic performance.

Scotland’s deficit jumped recently to £36.3bn in 2020-21, or 22.4% of GDP, due to the costs of health and economic interventions (and smaller tax base resulting from the COVID-19 pandemic).

The latest forecasts suggest that Scotland’s economy is recovering more quickly than expected and long-term economic scarring will not be as severe as previously feared. However, Scotland’s economy will inevitably be impacted by uncertainties in the global economy, such as rising inflation, supply chain interruptions, and slumping oil prices.  

It may be tempting to conclude in light of this uncertainty that reaching the 0.7% goal is not economically prudential, but this is also a mistake.

Countries benefit in a myriad of ways from official development spending. ODA helps countries build stronger diplomatic and economic ties, which will be essential to Scotland as it seeks to diversify its trade and investment.

Scottish exporters will also benefit from a growing middle class in international markets. ODA also generates reputational gains for donor countries, which can increase a government’s soft power on the world stage.

Academics use the term ‘soft power’ to describe the ability of an individual to influence another’s actions, not through force, but through persuasion and appeal.

Soft power enables small countries, like Scotland, to have a disproportionate influence in multilateral negotiations, including those aimed at defining the rules and institutions that will guide the global economy in the future.

In many ways, answering the question of affordability requires grappling with the more moral question regarding what responsibility Scotland bears in the international community.

It can be argued that Scotland faces a moral imperative in meeting the 0.7% target. Low- and middle-income countries will be disproportionately impacted by climate change, of which developed and emerging economies (and their corporations) have been disproportionately responsible.

Scotland also benefitted in its own development from the economic subjugation of British colonies in the Caribbean, Africa, India and Arab world.

ODA will be essential to combatting climate change and may be an important step towards restitution.

For some Scots, these moral considerations will make the 0.7% target seem more affordable.  

Scots will therefore have to do some soul searching in order to answer the question of affordability. Ultimately, some Scots will expect their governments to behave in ways that are economically opportunistic while others prefer international philanthropism.

It should be noted that the 0.7% target does not tell a country how or where to spend development assistance and it is easy to get it wrong.

In recent years the pendulum has swung more toward self-preservation in many countries, leading to important changes in development agendas.

In June 2020, the UK government folded the Department for International Development, long prised by development practitioners for its independent decision-making, into the Foreign and Commonwealth Office (FCO).

The government claimed the merger was needed to create efficiencies and better align development spending with the country’s commercial and diplomatic foreign policy objectives.

The UK government is not alone. Canada brought its International Development Agency under the thumb of the Department for Foreign Affairs and International Trade in 2013. Such mergers have been criticised by civil society groups as undermining countries’ abilities to address the most urgent development challenges in countries that need it the most.

No matter how much Scotland decides to spend, policymakers will have to resist the urge to blindly follow their peers in order to develop a development agenda that represents a truly independent nation.

Julia Calvert, Senior Lecturer in International Political Economy, University of Edinburgh