whose economy? scotland in northern europe: balancing dynamic economies with greater social equality
TRANSCRIPT
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Whose economy? Scotland in Northern Europe: balancing
dynamic economies with greater social equality
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Whose Economy? Poverty and Inequality
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Whose Economy? Oxfam/UWS seminar series
• Why persistent poverty exists alongside high economic prosperity, leading to significant inequalities in income and wealth, and in life chances and lifestyles, between individuals and communities. Why, despite decades of economic growth, regeneration and anti-poverty policies, many Scots face a life characterised by high mortality, economic inactivity, mental and physical ill-health, poor educational attainment, and increasing exclusion.
• Conclusion: Our Economy, A Whose Economy Seminar Paper, June 2011,
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• Why do we have less poverty than the United States, but much more than Norway, Sweden and Denmark? The reasons lie very much more in the distribution systems of the respective countries than in the personal behaviour of people in poverty. Why some affluent Western democracies maintain substantial poverty and others are more egalitarian and accomplish low levels of poverty is mainly due to “the generosity of the welfare state”.
• Adrian Sinfield, Whose welfare state now?, in Whose Economy?, http://policy-practice.oxfam.org.uk/publications/download?Id=436761&dl=http://oxfamilibrary.openrepository.com/oxfam/bitstream/10546/188809/5/dp-whose-economy-papers-complete-series-010911-en.pdf
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Recent quote
• The prime minister said: “there are countries in Europe, small countries that make it on their own, but ... we are better off, we are stronger together, we're fairer together, we're richer together”.
• So must be able to measure strength, fairness, richness and so compare. And, given what we’ve heard here already this morning, can we identify an even better way?
• Are there countries that are more resilient, robust, competitive [stronger], more equal with less poverty, greater gender equality and a progressive tax/welfare system [fairer] and more prosperous [richer]?
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Richer?
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International Monetary Fund (2011 estimate)
Rank Country US$1 Luxembourg 122,2723 Norway 96,5914 Switzerland 84,9837 Denmark 63,0038 Sweden 61,09813 Finland 50,09014 Ireland 48,51721 Iceland 43,22622 United Kingdom 39,604
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Rank Country Intl. $
1 Qatar 102,891
4 Norway 53,37613 Sweden 40,613
15 Ireland 39,50716 Iceland 38,07919 Denmark 37,741
21 Finland 36,72322 United Kingdom 35,974
International Monetary Fund (2011 estimate)
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Rank Country Intl. $
1 Luxembourg 89,769
4 Norway 56,894
10 Ireland 39,727
12 Denmark 39,558
14 Sweden 38,947
19 Finland 36,660
20 United Kingdom 35,860
21 Iceland 34,949
World Bank (2010)
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CIA World Factbook (2010)Rank Country Intl. $
1 Qatar 179,000
5 Norway 54,600
17 Sweden 39,100
18 Iceland 38,300
20 Ireland 37,300
21 Denmark 36,600
26 Finland 35,400
27 United Kingdom 34,800
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Thirty year annual average GDP growth rate (1977-2007), %
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0K
ore
a
Irel
and
Lu
xem
bo
urg
Tu
rkey
Icel
and
Au
stra
lia
Mex
ico
No
rway
Un
ited
Sta
tes
Can
ada
Po
rtu
gal
Sp
ain
Fin
lan
d
Jap
an
Net
her
lan
ds
Un
ited
Kin
gd
om
Gre
ece
Au
stri
a
Fra
nce
New
Zea
lan
d
Sw
eden
Den
mar
k
Bel
giu
m
Ger
man
y
Ital
y
Sco
tlan
d
Sw
itze
rlan
d
Source: OECD, ONS
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Scotland's long-term GDP growth performance (1975-2005)
Source: Eurostat, OECD, Scottish Government
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Indicator Scotland Denmark Finland Iceland Ireland Norway Sweden GDP growth - 30 year annual average 4 4 2 1 1 2 3
GDP per head 3 2 2 2 1 1 2
Employment rate (15-64 yr olds)2 1 2 1 3 1 1
Productivity 2 2 2 3 1 1 2
Entrepreneurial activity3 3 2 1 1 1 4
Total R&D as % GDP3 2 1 1 3 3 1
Business R&D as % total R&D4 2 1 3 2 3 1
Graduates as % of the population (aged 25-64) 2 1 3 1 2 1 2
Population growth (1999-2006)4 3 3 1 1 2 3
Net migration as a % of the population 2 4 3 1 1 2 3
Export sales growth -3 yr annual ave 4 3 3 2 3 4 2
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Fairer?
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Income inequality in selected OECD countries
Source: OECD (2008), Growing Unequal? Income Distribution and Poverty in OECD Countries.
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Gini coefficients of income inequality in OECD countries, mid-2000s
Note: Countries are ranked, from left to right, in increasing order in the Gini coefficient. The income concept used is that of disposable household income in cash, adjusted for household size with an elasticity of 0.5.Source: OECD income distribution questionnaire.
DNKSW
ELU
XAUT
CZESVK
FINBEL
NLDCHE
NOR IS
LFRA
HUNDEU
AUS
OECD-3
0KO
RCAN
ESPJP
NG
RCIR
LNZL
GBR
ITA
POL
USAPRT
TURM
EX
0.20
0.25
0.30
0.35
0.40
0.45
0.50
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% of the total population % of total population
Persons at-risk-of-poverty
after social transfers
Persons severely
materially deprived
Persons aged 0-59 living in
households with
very low work
intensity
Persons falling under at least one of the three criteria (at risk of
poverty or social exclusion)
2009 2010
EU27* 16.4 8.1 9.9 23.1 23.4 Denmark 13.3 2.7 10.3 17.6 18.3 Ireland : : : 25.7 : Finland 13.1 2.8 9.1 16.9 16.9 Sweden 12.9 1.3 5.9 15.9 15.0 United Kingdom
17.1 4.8 13.1 22.0 23.1
Iceland 9.8 1.8 5.6 11.6 14.3 Norway 11.2 2.0 7.3 15.2 14.9
At risk of poverty or social exclusion, 2010
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SEASONALLY ADJUSTED UNEMPLOYMENT RATES (%) Nov 11Youth (under 25s) Males Females
EA17 21.7 10.1 10.7
EU27 22.3 9.7 10.0
Denmark 14.9 7.6 7.9
Ireland 29.3 17.3 11.4
Finland 19.6 8.2 6.7
Sweden 23.2 7.6 7.4
UK (Sept 11) 22.0 9.0 7.5
Norway 8.6 3.3 3.4
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Net Replacement Rates for six family types: initial phase of unemployment
2009, different earnings levels
67% of AW 100% of AW 150% of AW
No children 2 children No children 2 children No children 2 children
Single person
married couple
Lone parent
married couple
Single perso
n
married couple
Lone parent
married couple
Single perso
n
married couple
Lone parent
married couple
One-earner
Two-earner
One-earner
Two-earner
One-earner
Two-earner
One-earner
Two-earner
One-earner
Two-earner
One-earner
Two-earner
Denmark 83 85 91 89 88 93 60 63 74 75 72 77 46 48 61 64 59 64
Finland 64 75 78 85 83 83 52 60 72 74 72 76 44 47 63 60 57 67
Iceland 77 72 89 84 77 91 77 80 86 83 83 88 56 61 71 65 67 74
Ireland 46 72 73 69 76 77 33 52 61 60 63 65 25 39 50 48 49 55
Norway 67 69 84 88 89 86 65 67 80 87 71 82 47 49 65 65 52 67
Sweden 69 69 85 83 80 86 48 48 69 65 58 71 36 36 58 51 44 60
United Kingdom
55 66 59 72 77 69 38 46 49 64 71 58 26 32 39 46 51 47
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over 90% in Finland;80%–89% in Belgium and Sweden;70%–79% in Denmark and Norway;60%–69% in Italy;50%–59% in Cyprus, Luxembourg and Malta;40%–49% in Romania;30%–39% in Austria, Ireland and Slovenia;20%–29% in Bulgaria, the Czech Republic, Germany, Greece, Hungary, the Netherlands, Portugal and the UK;10%–19% in Latvia, Poland, Slovakia and Spain;below 10% in Estonia and Lithuania.
Higher among women than among men in half of the 20 countries examined – Denmark, Estonia, Finland, Hungary, Latvia, Lithuania, Norway, Poland, Slovenia and Sweden
TU Membership Density (2008)
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Gender equality
• Proportion in Parliament• Proportion on Company Boards• CEOs• Childcare• Etc.
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The Global Gender Gap Index 2010 rankings: Comparisons with 2009, 2008, 2007 and 2006
2010 2009 2008 2007 2006
Country rank score rank score rank score rank score rank score
Iceland 1 0.8496 1 0.8276 4 0.7999 4 0.7836 4 0.7813
Norway 2 0.8404 3 0.8227 1 0.8239 2 0.8059 2 0.7994
Finland 3 0.8260 2 0.8252 2 0.8195 3 0.8044 3 0.7958
Sweden 4 0.8024 4 0.8139 3 0.8139 1 0.8146 1 0.8133
Ireland 6 0.7773 8 0.7597 8 0.7518 9 0.7457 10 0.7335
Denmark 7 0.7719 7 0.7628 7 0.7538 8 0.7519 8 0.7462
United Kingdom
15 0.7460 15 0.7402 13 0.7366 11 0.7441 9 0.7365
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Detailed rankings, 2010Overall Economic
Participationand
Opportunity
Educational Attainment
Health and Survival
Political Empowerment
Country Rank Score Rank Score Rank Score Rank Score Rank Score
Iceland 1 0.8496 18 0.7540 1 1.0000 96 0.9696 1 0.6748
Norway 2 0.8404 3 0.8306 1 1.0000 91 0.9697 3 0.5614
Finland 3 0.8260 16 0.7566 28 0.9993 1 0.9796 2 0.5686
Sweden 4 0.8024 11 0.7695 41 0.9964 80 0.9729 4 0.4706
Ireland 6 0.7773 25 0.7409 1 1.0000 89 0.9700 7 0.3985
Denmark 7 0.7719 23 0.7438 1 1.0000 68 0.9743 10 0.3695
United Kingdom
15 0.7460 34 0.7210 1 1.0000 90 0.9698 22 0.2933
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Press Freedom Index 2011/2012, Reporters without Borders
Rank Country Score
1= Finland -10,00
1= Norway -10,00
6 Iceland -7,00
10= Denmark -5,67
12 Sweden -5,50
15 Ireland -4,00
28 United Kingdom 2,00
http://en.rsf.org/spip.php?page=classement&id_rubrique=1043
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Stronger?
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Country/Economy Rank/142 Score GCI 2011–2012 rankamong 2010 countries
GCI 2010–2011 rank
Switzerland 1 5.74 1 1Singapore 2 5.63 2 3Sweden 3 5.61 3 2Finland 4 5.47 4 7Denmark 8 5.40 8 9UnitedKingdom 10 5.39 10 12Norway 16 5.18 16 14Ireland 29 4.77 29 29Iceland 30 4.75 30 31
The Global Competitiveness Index 2011–2012 rankings and 2010–2011 comparisons
World Economic Forum (2011) The Global Competitiveness Report 2011-2012, http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf
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Entrepreneurial activity rates -Scotland, UK, Arc of Prosperity countries, 2000 to 2007
TEA index 2007 Average annual TEA rate
Scotland as % of average TEA
rate
Scotland 4.6 4.8 United Kingdom 5.5 5.9 81%
Arc of Prosperity countries
Finland 6.9 5.7 85%Denmark 5.4 5.8 83%Norway 6.5 8.0 60%Ireland 8.2 8.8 55%Iceland 12.5 11.8 41%Sweden 4.2 4.4 110%
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R&D investments by ICT Scoreboard firms per country of registered headquarters in the
EU, in millions of € (2005-2008)
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ICT priority patent applications by EU Member State, 2000 and 2007
ICT patent Applications ICT Patent Applications /milllion
inhab.
ICT Patent Applications/GDP (billion
euro)
2007 2007 2007DE 7971 Finland 136 Finland 4.03FR 3030 DE 97 DE 3.28UK 1809 Sweden 62 Sweden 1.69Finland 723 AT 52 FR 1.60Sweden 571 FR 49 AT 1.58NL 497 IE 36 BG 1.35AT 430 NL 30 SI 1.06IT 350 UK 30 CZ 0.91ES 318 Denmark 29 EE 0.89
BE 236 BE 22 UK 0.88
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Number of ICT and non-ICT patent applications per million inhabitants, by EU Member
State, 2007
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EU Member States’ innovation performanceInnovation leaders: Denmark, Finland, Germany, Sweden all show a performance well above that of the EU27 average
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Happiness and quality of life?
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HappinessOnce again, Norwegians rank among the happiest people in the world, behind only their fellow Nordic neighbours in Denmark and Finland. The latest Gallup World Poll indicates that the Nordic countries, with their social welfare states and relative affluence, must be doing something right.
Only the people of Iceland were missing when four out of the five Nordic countries grabbed the top spots on the Gallup World Poll’s list. Sweden ranked just after Norway in a tie for fourth place .
Forbes Magazine, from OECD report
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Place
In Norway, also considered by the United Nations to be the world’s best place to live, fully 69 percent of the population were said to be thriving while none of the respondents was “suffering.” But 31 percent were considered to be “struggling,” compared to 30 percent in Sweden, even though the economy in Sweden is considered to be weaker than Norway’s.
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OECD Better Life Initiative. (2011)
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‘Happiest countries in the world’ [OECD plus economic stability]
10. Austria 9. Israel 8. Finland 7. Switzerland 6. Sweden5. The Netherlands 4. Australia3. Norway 2. Canada 1. Denmark
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Human Developme
nt Index (HDI)
Gross National
Income (GNI) per capita
GNI per capita rank minus HDI
rank
Nonincome
HDI
HDI rank
Value(Constant
2005 PPP$) Value 2011 2011 2011 2011
1 Norway 0.943 47,557 6 0.975
7 Ireland 0.908 29,322 19 0.959
10 Sweden 0.904 35,837 4 0.936
14 Iceland 0.898 29,354 11 0.943
16 Denmark 0.895 34,347 3 0.926
22 Finland 0.882 32,438 0 0.911
28 United Kingdom 0.863 33,296 -7 0.879
Human Development Report 2011 - Sustainability and Equity: A Better Future for All Human Development Index
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Resilient and robust?
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Legatum Prosperity Index (2011)
1 Norway
2 Denmark
5 Sweden
7 Finland
11 Ireland
12 Iceland
13 United Kingdom
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The Road to a Better Place?
• Can we join this group – that is move into the high income, high wealth, sustainable, low inequality, high opportunity, coherent economy and society?
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Traffic problems: the Road
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The Arc of Prosperitybecomes
“Only prudent Norway is holding its head above water”.
• Associated Press: “Iceland teeters on the brink of bankruptcy”• International Herald Tribune: “Iceland is all but officially bankrupt”• Forbes: “Iceland teeters on bankruptcy”• New York Times: “Iceland, in financial collapse...”
• ‘the arc of insolvency’• ‘the arc of darkness’• ‘the arc of delusion’
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Financial crisis
• Surely small countries cannot cope ~ Nordic model(s) ‘not sustainable’
• Better together•Protection•Support•Recovery
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Public Debt (% of GDP) 2010 Country Ranks, By Rank
Rank Country Value
10 Iceland 100.6
22 United Kingdom 68.5
27 Ireland 63.7
29 Norway 60.2
40 World 53.6
53 Finland 46.6
60 Sweden 43.2
67 Denmark 38.1
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List of countries by public debt (2011)
Public debt as %GDP
(CIA and Eurostat) (IMF)Sweden 39.7 39.70Denmark 43.7 43.65Finland 48.3 48.39Norway 48.9 55.42World 59.3 79.25United Kingdom 79.9 75.50European Union 82.3 80.00Ireland 94.9 94.92Iceland 126.1 92.37
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IMF Report:During the past twenty years we have witnessed several major crises throughout the financial world. The IMF study of banking crises around the world reveals that 133 countries experienced significant banking sector problems at some stage during the years 1980-1995. The amount of public expenditure needed for resolving the crises and reviving banking sector activity has been remarkable in all countries. According to the above-mentioned IMF study, in some 25% of the crises, the costs exceeded 10% of GNP. The figures from the Nordic countries show that taxpayers' costs have ranged from 3% (Norway) to 8% (Finland) of GNP. Considering that not only the government budget but the whole economy suffers from such a crisis, it is understandable that the countries around the world, together with international organisations, have joined forces to determine the most efficient ways to avoid systemic financial crises.
Banking crises
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“The arc of prosperity become the arc of insolvency”
Sweden and Norway had banking crises in the early Nineties. The Scandinavian banks collapsed after ... a credit and property bubble in the 1980s that burst just like ours. The Norwegian government moved quickly, driving down the shares of the banks to zero, nationalising many and taking an equity stake in the rest. It restructured and recapitalised the banks and then sold them off, so that the Norwegian taxpayers didn’t lose and the bankers didn’t get bailed out.
http://iainmacwhirter2.blogspot.com/2008/10/arc-of-prosperity-become-arc-of.html
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Stopping a Financial Crisis, the Swedish Way A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. . banking system was, for all practical purposes, insolvent. … [but 3 years later, Sweden back on track]
But the final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, [with more returns to come].
However, the reforms enacted during the 1990s seem to have created a model in which extensive welfare benefits can be maintained in a global economy.
NY Times
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A better fiscal way?
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GDP, government deficit/surplus and debt in the EU (in national currencies)
2007 2008 2009 2010
Denmark Government deficit (-) / surplus (+) (% of GDP) 4.8 3.2 -2.7 -2.6
Government expenditure (% of GDP) 50.8 51.9 58.4 58.5 Government revenue (% of GDP) 55.6 55.2 55.6 55.7
Government debt (% of GDP) 27.5 34.5 41.8 43.7Ireland
Government deficit (-) / surplus (+) (% of GDP) 0.1 -7.3 -14.2 -31.3 Government expenditure (% of GDP) 36.6 42.8 48.9 66.8 Government revenue (% of GDP) 36.7 35.5 34.7 35.5
Government debt (% of GDP) 24.9 44.3 65.2 94.9Finland
Government deficit (-) / surplus (+) (% of GDP) 5.3 4.3 -2.5 -2.5 Government expenditure (% of GDP) 47.4 49.3 55.9 55.3 Government revenue (% of GDP) 52.7 53.6 53.2 52.5
Government debt (% of GDP) 35.2 33.9 43.3 48.3Sweden
Government deficit (-) / surplus (+) (% of GDP) 3.6 2.2 -0.7 0.2 Government expenditure (% of GDP) 51.0 51.7 55.0 52.9 Government revenue (% of GDP) 54.5 53.9 54.1 52.8
Government debt (% of GDP) 40.2 38.8 42.7 39.7United Kingdom*
Government deficit (-) / surplus (+) (% of GDP) -2.7 -5.0 -11.5 -10.3 Government expenditure (% of GDP) 43.9 47.9 51.4 50.4 Government revenue (% of GDP) 41.1 42.9 40.1 40.3
Government debt (% of GDP) 44.4 54.8 69.6 79.9
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Government Expenditure and Revenue as % of GDP
2007 2010
DENMARK
Government expenditure 50.8 58.5
Government revenue 55.6 55.7
IRELAND
Government expenditure 36.6 66.8
Government revenue 36.7 35.5
FINLAND
Government expenditure 47.4 55.3
Government revenue 52.7 52.5
SWEDEN
Government expenditure 51.0 52.9
Government revenue 54.5 52.8
UNITED KINGDOM
Government expenditure 43.9 50.4
Government revenue 41.1 40.3
Fiscal Stability and Responsibility
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Personal taxation
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Current Account Balance to GDP
General Government OverallBalance to GDP
2009 2010 2011 2012 2009 2010 2011 2012
Advanced European Economies
0.7 0.8 0.8 1.0 -6.4 -6.0 -4.3 -3.3
Euro area -0.3 -0.4 0.1 0.4 -6.3 -6.0 -4.1 -3.1
Finland 2.3 3.1 2.5 2.5 -2.8 -2.8 -1.0 0.3
Ireland -2.9 0.5 1.8 1.9 -14.2 -32.0 -10.3 -8.6
Other EU advanced economies
Denmark 3.8 5.1 6.4 6.4 -2.8 -2.9 -3.0 -3.0
Sweden 7.0 6.3 5.8 5.3 -0.9 -0.3 0.8 1.3
United Kingdom -1.7 -3.2 -2.7 -2.3 -10.3 -10.2 -8.5 -7.0
Non-EU advanced economies
Iceland -11.7 -10.2 1.9 3.2 -8.6 -5.4 -4.1 -2.3
Norway 12.9 12.4 14.0 12.8 10.6 10.9 12.0 11.2
Memorandum
European Union -0.1 -0.1 -0.2 0.0 -6.8 -6.5 -4.6 -3.6
Advanced European Countries: Main Macroeconomic Indicators, 2009–12 (Percent) IMF
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Total tax revenue as percentage of GDP, 2009, ranked by tax to GDP ratios
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Summary
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View from Wall Street
The happiest countries seem to be places where there is a good balance of work and leisure time. Not all nations can afford to keep unemployment low through government subsidies. Not all countries can afford to provide universal medical coverage. Not all countries can afford to educate almost all of their children, which in turn supports extremely high literacy rates and builds a population of skilled workers.
24/7 Wall St
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Together or not:
The prime minister said: “there are countries in Europe, small countries that make it on their own, but ... we are better off Xwe are stronger Xwe're fairer X we're richer X
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Impacts of poverty
• poor in a rich country intensely stressful• made worse by stigmatisation both in the
media and as result of political rhetoric. • Pressures to consume stem from a culture
that elevates passions and image above relationships, community contribution, and care for others and the environment
• There must be a better way
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Routes out of poverty• Possible to overcome poverty, 6th richest =>
adequate resources. Need allocation in more effective and sustainable way.
• Greater role for businesses: paying taxes, ↑ employment of those further from the labour market, offering decent jobs in sustainable industries.
• Higher expectation on businesses to deliver social sustainability, particularly in return for the array of state support that businesses receive.
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Social protection and equality• social protection measures (education, NMW
and social safety nets) strong mechanisms to increase equality.
• they are a collective good - all depend on and all benefit, cf. financial drain.
• funded fairly by progressive taxation.• Collective ownership, management =>
genuine participation in all economic activity – sharing ownership, work, and rewards
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Can we move from poverty - prosperity
• new prosperity, a shared future where we are simply better at sharing, where there are fewer extremes of money and wealth, esteem and status, power and position.
• community-led economy focused on quality and distribution of growth, where the assets of communities and the value of individuals are utilised and enhanced to promote social and environmental sustainability.
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Size matters
Iceland's Finance Minister Steingrimur Sigfusson has told the BBC that his country's size has been crucial in the move towards recovery: "You are quicker turning a small boat around than a big ship."