NEW YORK (TheStreet) -- There are arguments for and against Scotland leaving the United Kingdom. Some Brits will be sad to see it go, but Scottish separatists want their independence. Sounds good, but at what cost?
If Scots vote for independence on Thursday, it will hurt Scotland more than the U.K. There is no way Scotland can compete in the global economy without the U.K. Sure Scotland is rich in natural resources, but that can't sustain its economy. Natural resources are not seen as a source of global competitiveness in the 21st century. For one, Africa and some countries in Latin America have tons of natural resources, yet lack the investment in infrastructure to make a meaningful difference.
Independent Scotland poses little economic threat to the U.K., as well. Big banks have threatened to pull out of Scotland and move to England. If this happens, the U.K. would not be financially affected. It might even improve.
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About 10% of the U.K.'s GDP comes from the financial sector, and another 5% comes from related financial services. Close to 7% of the country works in the banking sector. Of the 2 million people in the U.K. who work in financial services, only 50,000 live in Scotland.
The U.K. is a very interesting country because it ranks 16th out of 60 in the IMD World Competitiveness Rankings. This may seem low given the relative weight of the U.K. in the world economy. However, the main source of U.K. strength is currently not Scotland but the City of London and its financial sector. Without this sector, some say, the U.K. (or Great Britain -- Scotland, Northern Ireland, England and Wales) would be no more of an economic powerhouse than other lower-ranked European countries such as Portugal or Austria.
On the other hand, IMD's research on competitiveness has shown a relative advantage of small nations over big countries. Government spending, infrastructure investment, and fiscal policy tend to be more efficient. Besides, small countries are usually more successful in their long-term economic strategies because execution is easier. Among the 10 most competitive economies in the 2014 IMD World Competitiveness Rankings, six are relatively small.
And yes, there is a global trend toward smaller and more efficient government entities. The governments in Switzerland, the federal structure of the United States, and Germany appear to have governments that are rather close to their citizens. At the same time, there is a negative attitude in Europe toward the supranational, European-wide institutions that are seen as neglectful of the everyday needs of the population.