Initial data for 2016 imports and exports published

The latest Quarterly National Accounts Scotland (QNAS) release include data on Scotland’s onshore imports and exports for 2016.

Source: QNAS 2016 Q4—Summary Tables (Table G).

These initial data show that in 2016 Scotland exported £46.6 billion (63.7%) of goods and services to rUK. As a percentage, this is down very slightly from 64% in 2015, but is subject to future revisions. The statistics also show that 61.7% (£51.3 billion) of Scotland’s imports came from the rest of the UK (up slightly from 61.1% in 2015). (We won’t know how much rUK exported to Scotland in percentage terms until the new Pink Book is published in October.)

Some caution should be exercised with regard to these initial figures for imports from rUK. The government’s bulletin notes that they “rely on statistical modelling and supply & use balancing to produce results. For this reason, results are liable to frequent revisions until they have been subject to a full annual supply and use balancing process.”1.

The below chart gives a fuller picture of Scotland’s trading position, showing how much is imported and exported to and from both rUK and the rest of the world. In 2016 Scotland had an overall trade deficit of almost £10 billion. Scottish Government analysis shows that the increasing value of imports caused the widening of the onshore net trade deficit. This ultimately had a negative effect on GDP growth2.

Source: QNAS 2016 Q4—Summary Tables (Table G).

Full details of 2016 exports are expected to the published in January 2018.

‘Gravity’ relationships in trade

Pro-Union advocates highlight Scotland’s reliance on the rUK export market to argue against independence. However, it’s perfectly possible for a country to do significant trade with its nearest neighbour. For example, in 2015 Canada exported 77% of goods and 55% of services to the USA3. By comparison, Scotland exported 55% of goods and 71% of services to rUK. Or to look at it another way, 55% of Scotland’s exports to rUK are in services (27% of which are in financial and insurance services); 45% in goods4. This exposes Scotland to risk, whether independent or not—but arguably more so under independence, at least early on and until any diversification of trading partners takes place. A good agreement between rUK and Scotland on the basis of legacy arrangements would lessen the likelihood of problems, e.g. with financial regulation.

Scotland’s reliance on the rUK market can be partly explained by considering the so-called ‘gravity’ relationships between trading partners. Keith Head and Thierry Mayar noted in a 2013 research paper that “exports rise proportionately with the economic size of the destination and imports rise in proportion to the size of the origin economy.”5 This statement reflects the data on Scotland’s trading relationship with rUK.

To use another country as illustration, the diagram below shows how in 2006 Japan exported more to the larger economies of the EU, and less to the smaller ones. Also, the larger the economy, the more Japan imported from it.

Source: Head and Mayar, Gravity Equations: Workhorse, Toolkit, and Cookbook (2013), page 7.

The diagram below show how distance is also a factor in how much trade occurs between countries: in 2006 France exported more to, and imported more from, countries that were closer.

Source: Head and Mayar, Gravity Equations: Workhorse, Toolkit, and Cookbook (2013), page 7.

Considering these factors, and Scotland’s long history and shared currency with rUK, it’s little surprise that Scotland exports 64% of goods and services to and imports 62% from rUK6.

(North Sea oil and gas are not included in Scotland’s trade figures because of the difficulty in calculating the figures7. However, some recent experimental statistics have been published.)

  1. QNAS Q4 2016 Statistical Bulletin, page 5, par. 6.
  2. QNAS Q4 2016 Statistical Bulletin, page 1, bullet point 5. See also chart on page 4.
  3. Source: UN Comtrade Database.
  4. Source: Export Statistics Scotland 2015.
  5. Head and Mayar, Gravity Equations: Workhorse, Toolkit, and Cookbook (2013), page 6, para. 3.
  6. In 2015 rUK exported about 10.5% of goods and services to Scotland. But, of course, Scotland is a much smaller economy.
  7. Quarterly National Accounts Scotland: Quarter 3 2016 (page 5); also Export Statistics Scotland 2015 (page 39).

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