Joan McAlpine: Scotland should take its lead from this corner of Spain

Its most famous expat, Simon Boliver, was the revolutionary father of Latin America. Today, it is notable for Rioja wine, the best food in Spain and the Guggenheim Bilbao, the world's most iconic contemporary building.

But it's not just foodies, wine buffs and cultural tourists who are drawn to the fat little region west of the Pyrenees. The Basque country, which enjoys the widest and deepest autonomy of all the Spanish regions, is an attractive model for Scotland.

Holyrood politicians send all taxes south then squabble over how to cut up a shrinking cake returned by Westminster. The ancient province of Euskadi keeps the whole tortilla. The Basques set, raise and collect all their own taxes, then negotiate an annual cupo with Madrid for central services, usually about 12 per cent.

You might think anyone keen to extend Scotland's economic powers should avoid discussions of an Iberian nature. Spain is in meltdown, with Europe's third-worst deficit after Greece and Ireland. Austerity measures so far announced are unpopular. Savings banks are collapsing. Today, the federal socialist government will unveil a restructuring of the labour market to end infamous "Spanish practices".

Red flags will be raised in Bilbao as well – a major strike is planned there on 29 June. But while the Basque country is not immune to the global crisis, it is better placed to survive. The area outperforms Spain on nearly every indicator. Its GDP per capita is 34 per cent higher and it has half the rate of unemployment. The credit agency Standard and Poor's gives the Basques a better rating than the central government – because of its low debt burden, wealthy, diverse economy and "special system framework granting the region control over most of its tax revenues". That's a recommendation – CBI bosses take note.

The Basque arrangement is similar to the system devised by the economists Andrew Hughes-Hallett and Drew Scott, which forms the basis of the Campaign for Fiscal Responsibility. Business leaders such as Jim McColl and Tom Hunter and trade unionists such as Campbell Christie have backed the campaign, believing fiscal powers offer Scotland its only option of growing the economy. The tax regime would be designed to meet specific, local needs. The Basques, for example, set a lower corporation tax than the rest of Spain and have borrowed to upgrade their infrastructure.

But can we really compare the wealthy, entrepreneurial communities of this sunny little enclave to Scotland? Actually, the more one looks, the more uncannily similar we appear – right down to the "oceanic" climate (ie, it rains a lot). The countries have the same craggy topography that allowed the indigenous languages to survive the incursion of the Romans. We have famous seafaring communities. Like Scots, the Basques are over-represented in the mother country's army and navy. And though our business start-up rates are now worryingly low, it was not always the case. Scots, like the Basques, once took on the world, exporting everything from cotton thread to locomotives.

While both countries are known for their natural beauty, they are each highly urbanised, with populations concentrated in Scotland's Central Belt and Basque's Bilbao estuary. The latter, with its shipbuilding and machine tooling, was much like the Clydeside of old. Both regions found wealth through natural resources, coal and iron ore. Both suffered the same industrial decline, triggered by the oil crisis of the early 1970s. But, somehow, the Basques managed change better.

The London School of Economics studied eight cities in need of regeneration across Europe, including Bilbao. Its published paper, in 2007, is quite open about the difference full fiscal autonomy made to the efforts of the city fathers in turning around their town. It says: "It is widely accepted among officials, practitioners and scholars that the autonomy of the Basque region was key to facilitating the recovery process in Bilbao. The return of democracy and the reinstatement of regional power in the late 1970s happened just as the industrial crisis was gaining momentum. Local decision-makers gained power to design tailored policies for the first time."

This translated as building the Guggenheim on the dilapidated waterfront and modernising the metro system – with stations designed by Sir Norman Foster. Other suburban rail networks were extended and upgraded and a high-speed link to Madrid, much of it tunnelled through the mountains, is under way.

Instead of sweeping away manufacturing, as happened in Scotland in the 1980s, the Basques modernised. They are now home to Iberdrola, the multinational energy company which bought ScottishPower. Gamesa, one of the world's largest manufacturers of wind turbines, is Basque. Aeronautics and machine-tool companies still thrive, guaranteeing export earnings denied to economies that placed too much trust in the service sector.

Alex Salmond is known to support the Campaign for Fiscal Responsibility. But the SNP has historically avoided comparisons with the Basque country because of the bloody reputation of Eta, the separatist terror movement. The violent insurgents, whose roots lie in Franco's fascist state, are a small and marginalised force these days. The publicity generated by their campaign diverted attention from a real success story. In Scotland, we worry about the "distraction" of constitutional questions. The Basques became Spain's most successful region despite the real distraction of bombings and assassinations.

Perhaps a greater difficulty for the Scottish Nationalists is the failure of the Basques to make the transition from full fiscal autonomy to independence. The moderate and business-friendly Basque nationalists governed for three decades but lost the presidency last year when the socialists did a deal with the conservatives. Still, the financial crisis may put the relationship with Madrid into sharper focus. The Basques make up 2.2 per cent of the Spanish population but contribute 6.2 per cent to its GDP. Will Spain go to the Basques, cupo in hand, asking for more? Things could get lively.

The Iberian disagreement is more dignified than Scotland's block grant dilemma or Calman's flawed proposal. We will constantly be arguing for more. But we have no idea how much we put into the UK pot and no method of increasing it. The Basque solution offers clarity, equality and self-respect.

Perhaps the last word should go to Boliver, whose surname is taken from the Basque village where his family originated and who believed large, overly complex states were doomed to fail. "The distinguishing characteristic of small republics is stability," he wrote. "The character of large republics is mutability."