The best small country in the world? Not yet

Key points

• Scotland second-bottom in league table of small nations

• "Index of success" based on economy, health & education

• Research was commissioned by the Federation of Small Businesses

Key quote

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"We welcome a debate on the factors influencing Scotland's success and are encouraged to see that this report reflects a number of our strengths. " - The Scottish Executive

Story in full SCOTLAND is far from "the best small country in the world" that Jack McConnell, the First Minister, has promised to build. In fact it is languishing second from the bottom in an "index of success" league table of small nations, a report out today reveals.

Only Austria is below Scotland in a ranking of ten smaller countries, according to research commissioned by the Federation of Small Businesses (FSB).

The figures - calculated by looking at internationally recognised measures of GDP, life expectancy, employment and education - are a blow to Mr McConnell's ambitions for Scotland. As well as being second bottom among small nations, Scotland is also 15th out of 31 OECD countries - the same ranking as last year - and 16th out of 24 economically developed nations, up one place on 2005.

However, the report contains some good news for the First Minister. When comparisons are made with the other nations and regions of the United Kingdom, Scotland is as successful as London and the East Midlands of England, and ahead of Wales, Northern Ireland and most regions south of the Border.

The study also demonstrates clearly that the main reason for Scotland's relatively lowly status is its poor health record, in this case measured by life expectancy.

The report, written by the economist John McLaren, who advised former first ministers Donald Dewar and Henry McLeish, shows the best performing countries are Switzerland and Iceland, closely followed by Norway.

Taking the list of 24 developed nations as the best comparison, Scotland lies below the halfway point, close to France and Austria but ahead of poorer states such as Portugal and Greece.

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However, the league table average disguises variations in the different indices used to give a "score" for Scotland. The report notes that, in terms of individual indicators, Scotland's performance remains:

Average, in terms of GDP per capita;

Very poor, in terms of life expectancy - the lowest of the 24;

Above average for education and employment.

The newly created index for the UK shows the best-performing regions as the south-east, east and south-west of England. Although Scotland is sixth out of the 12 nations and regions of the UK, the document says it is best to view them in five tiers.

Scotland is in the second tier, along with London - which suffers because of poor employment and below average education scores - and the East Midlands of England.

The third tier consists of the West Midlands and Northern Ireland; the fourth contains Yorkshire and Humberside, the north-west of England and Wales, and the fifth tier is the north-east of England, a long way behind the others.

According to the report, there is a "capital city effect" around London, while the south-east and east are heavily influenced by their proximity to and participation in the Greater London economy.

It says: "There appears to be an inverse relationship in England between performance and distance from the capital's economy, with the worst three performers being in the most northerly regions.

"However, this relationship breaks down at the borders, with Scotland, Wales and Northern Ireland all performing 'mid-table'. This may be as a result of historical benefits from having greater political influence on funding than the constituent areas of England."

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In terms of the international comparisons, the report notes: "In general, it is noticeable that in most tiers or groupings of similarly performing countries, a mixture of high- and low-tax economies can be found."

On the subject of Scotland's health record, the report says that if it had the median life expectancy, it would gain 0.5 points on the score, moving it to the top end of the better performers in the 24-nation table and taking it above Finland.

In the survey of ten small nations, Scotland scores below average in all the measures except for education.

If it got the median life expectancy score among the ten small countries, it would move up 0.5 to 1.84 and sixth position, leapfrogging New Zealand, Ireland and Denmark.

Mr McLaren says that the averages for the ten small countries are equal to or higher than the averages for the 24 nations, adding: "It would seem that size is not a constraint on success but may indeed offer greater opportunities to succeed."

Andy Willox, the FSB's Scottish policy convener, said: "The First Minister has outlined his intention to turn Scotland into the 'best small country in the world', which we strongly support. Scotland has climbed one place compared to the ten small, developed countries of the OECD but is still well behind similar-sized countries like Norway, Ireland and Switzerland.

"The index suggests we still have some way to go before we turn that ambition into reality."

The Scottish Executive said: "We welcome a debate on the factors influencing Scotland's success and are encouraged to see that this report reflects a number of our strengths. However, it is important to recognise that the report only examines a limited set of criteria.

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"Scotland's heath is improving, but we recognise this improvement is not happening fast enough. We are tackling this on a number of fronts and the report acknowledges our ban on smoking in public places - which will be the biggest single improvement in public health in a generation when it comes into force.

"In addition, we are taking a preventative approach to stop health problems before they occur. This includes investing 15 million over the next two years to improve access to healthcare services in Scotland's most deprived communities and working with schools and nurseries to improve diet and exercise.

"Health improvement is at the heart of our activities and ... there is a challenge for each of us to take responsibility for our own health."