Implications for International Business of Separatist Movements: The Case of Scottish Independence

In September 2014, the people of Scotland will vote in a referendum proposing that Scotland should become an independent country. If voters in Scotland accept the proposal, Scotland would become a new country. The White Paper containing the case for independence (Scottish Government, 2013) clearly states that an independent Scotland would continue to be an open economy. In these circumstances, foreign direct investment (FDI) both inward and outward, and foreign trade, would be central to the Scottish economy. In effect, a yes vote leads to the creation of a new small developed economy that is heavily integrated into the global economy. In different parts of the world, separatist movements are seeking to break away from the countries they currently are part of, for example, Wallonia and Flanders in Belgium, Catalonia, and the Basque Country in Spain, Quebec in Canada, various parts of Indonesia and in many other places. International business research has not investigated the implications for FDI and trade of the possibilities of successful separatist movements creating new small open economies. It is possible that a number of new small open economies could emerge in the coming years. There is research, but not much, on existing small open economies and FDI and trade (Barry and Kearney, 2006; Hooley et al, 1996). This work reveals that small open economies can prosper and attract considerable volumes of FDI that often stimulates exports.