Economic Development in Scotland – SPICe Spotlight


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Economic development in Scotland

SPICe has published a briefing note on economic development in Scotland. The briefing provides an overview of the economic development landscape in Scotland. It examines the main organizations involved in the implementation of economic development activities, the direction of economic development strategy and current economic development programs in Scotland.

This blog, a summary of our new briefing, provides a high-level overview of some of the key themes. We recommend readers to consult our full report for a broader context and a range of related themes.

What is economic development?

There is no single definition of economic development, but it can include:

  • business support
  • targeted investment in and operation of infrastructure
  • investment in skills and training
  • support for marketing, promotion and networking.

These interventions can have various objectives, including:

  • productivity improvement
  • encourage a “greener” activity
  • support innovation
  • generate more exports
  • promote start-ups
  • encourage foreign investment
  • and getting people into good quality jobs.

It usually does not include measures for managing the economy such as fiscal policy (changes in taxes, spending and borrowing), monetary policy (such as setting interest rates) or other measures. regulatory (eg on price caps, environmental or safety standards, or labor market conditions).

The Scottish Act of 1998 created the Scottish Parliament, giving Scotland control over devolved areas such as health, education, justice, transport, local government and economic development.

Scotland’s Economic Development Organizations

The main players in economic development in Scotland include:

  • Scottish company
  • Highlands and Islands Enterprise
  • South of Scotland company
  • Local government
  • Regional economic partnerships
  • Scottish National Investment Bank
  • Skills development in Scotland.

In addition to the economic development organizations and partnerships described, other publicly funded organizations playing a role in economic development include:

  • Visit Scotland
  • Transport Scotland
  • Scottish Funding Council.

Measurement issues and a crowded landscape?

Measuring the activities of state-funded economic development agencies against the Scottish government budget and expected results has been a continuing challenge for parliamentary oversight. Over 20 years ago, in 1999, this issue sparked concern on the part of a parliamentary committee, and despite the passage of time, a report on the 2021 legacy of a parliamentary committee concluded same way.

A ‘crowded landscape’ has been a recurring theme when it comes to economic development in Scotland. Over the past six years we have seen attempts to rethink the ‘enterprise and skills’ landscape in Scotland, through the activities of the Enterprise and Skills Strategic Board. But the question is whether this resulted in the change originally planned, as some would argue that the landscape is still crowded.

Economic Development Strategy in Scotland – is there one?

There is no agreed definition of economic development activity, as has already been pointed out. However, since decentralization in 1999, the Scottish Executive / Scottish Government has implemented some form of economic development strategy – early strategies were designed as economic development strategies, but more recently they simply tend to be called economic strategies.

The first strategy, following deconcentration, began as a direction for the corporate networks of the time (these networks were abolished in 2007, as detailed in the briefing). Successive strategies gradually tackled broader social challenges and provided guidance to the entire public sector, eventually culminating in the “One Scotland approach” in Strategy 2015.

Over the past two decades, Scotland’s economic policy landscape has shifted from a narrow corporate agency approach to a broader whole government approach. While this more holistic approach to economic policy has merit, it has weakened accountability and made it all the more difficult to assess what is actually working. There have been no formal procedures in place to form an overall assessment of the success of successive economic strategies.

Funding programs

Our new briefing details some of the major funding programs that support economic development in Scotland. These include the EU Structural Funds and their proposed replacements, this year the Community Renewal Fund, and next year the Shared Prosperity Fund, as well as the Leveling Up Fund (in the UK). United). It also provides some details on:

  • Green Ports (the proposed Scottish version of Freeports)
  • Urban and regional growth offers
  • corporate zones
  • and other programs such as the Green Jobs Fund, the National Manufacturing Institute and a Women’s Business Center.

Frictions or synergies in the strategy?

The briefing describes a constant process of reorganization and reshaping of governance arrangements in the economic development landscape over the past two decades in Scotland. This has been shaped by actors at the local, Scottish and UK levels. The briefing examines whether this creates friction or synergies for different places in Scotland in order to further economic development.

The overview of the main funding interventions currently being implemented or planned in Scotland’s economic development landscape illustrates the different policy levers that the Scottish and UK governments pursue, which are not always fully aligned. The economic development landscape is complex, and this complexity is not necessarily facilitated by the varying intentions of different public sector actors.

Alison O’Connor and Simon Wakefield,

Financial Control Unit, SPICe


Blog image by Nick Youngson CC BY-SA 3.0 Alpha Stock Images


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