Introduction
On 1 May 2019 the Scottish Government published ‘A Trading Nation – a plan for growing Scotland’s exports’. This new plan sets a headline target of growing exports from 20% to 25% of GDP over ten years. This blog provides an overview of the new plan.
Previous plan – target missed
For the period 2010 to 2017, the Scottish Government set itself a target of increasing exports by 50%. SPICe previously published a blog on the final figures, which showed this target was not achieved – exports grew by 35% over the period. Exports as a percentage of GDP reduced very slightly, and the rest of the UK remained the main destination for Scottish exports (the share reduced from 65% to 60%).
In 2016, the Scottish Government also published ‘Global Scotland: trade and investment strategy 2016-2021’. This 8-point plan aims to increase trade and investment in Scotland, and so overlaps with both the previous and the new export focused plans. It is not clear whether ‘A Trading Nation’ is intended to entirely supersede this plan or not.
The new approach
The Scottish Government has described ‘A Trading Nation’ as the most detailed examination of Scotland’s international exports ever undertaken by the Scottish Government, and at 230 pages it is certainly comprehensive. This is considerably more analysis than accompanied the previous plan, but does this make ‘A Trading Nation’ more likely to meet its goals?
In preparing the strategy, the Scottish Government has posed four key questions;
- What are the export strengths we should promote?
- Where should we promote these strengths and when should we step up our presence in these markets?
- Who should we work with most intensively to boost out export performance?
- How do we best configure government and wider support to deliver export goals?
To explore and answer these questions, the plan has been put together with engagement from over 30 organisations including UK Directorate for International Trade (DIT), Scottish Council for Development and Industry, Chambers of Commerce, Confederation of British Industry Scotland, Institute of Directors, Federation of Small Business, Universities Scotland and the Fraser of Allander Institute.
In contrast to the previous exports strategy, ‘A Trading Nation’ focuses resources on countries and sectors which it states are most likely to deliver the largest, most sustainable contributions to Scotland’s economic growth.
The plan includes £20 million of funding over the next three years, which is in addition to the £85m already provided to support businesses engaged in trade and investment. To target this investment, the Scottish Government has profiled the 26 countries which account for over 80 per cent of current exports, and identified these countries’ share of the ‘export value gap’. This gap is calculated by comparing Scotland’s current exports with those of similar competitors. Details on this calculation are set out in section 4.1 of the analytical methodology note. The top 15 countries are priority 1 markets where the Government expects the bulk of future growth to come from, the chart below lists these.
The Government states that exporters to these priority 1 markets – representing 66% of international exports – will be supported by the Scottish Government through:
- Scottish Development International in-market presence.
- Trade envoys, often with a focus on specific sectors (the plan suggests a possible increase from 4 to 12).
- GlobalScot expansion (from 600 to 2,000).
- Priority for in-market sector specialists.
- Priority for trade missions and ministerial visits.
The next 11 countries are designated priority 2 markets (see above). These countries account for 14% of current international export value and 11% of the export value gap. These markets will be supported through the expansion of the GlobalScot network and Trade Envoys, close working with DIT, and may also benefit from SDI in-market presence, a scaled back set of policy responses identified for priority 1 countries.
Tools and Data
The Scottish Government has published some tools and data to assist exporters and policy makers:
- Export Statistics Scotland 2017. This analysis sets out the end point for the previous strategy, and the base year for the new.
- The above has been used to create an Export Performance Monitor.
- Export Value Gap tool, which has been used to provide the analyse of the gaps identified in the infographics above.
New strategy – future actions
The plan includes several actions which the Scottish Government and agencies will aim to undertake to achieve the strategy’s aims.
- Analyse key markets – USA and China – at sub-nation level.
- Build on existing academic links in the advanced technology sector to create significant Scottish presence in those markets.
- In contrast to traditional export promotion activities (focused on a specific sectoral trade mission), opportunity to pioneer a new approach of identifying specific challenges in target markets and positioning a strategic cross sectoral offering.
- Undertake analysis of the sub-sector economic impact – ie how exports in one sector will increase GDP in Scotland.
Given the uncertain political context, it is very likely that the conditions of trade with the countries and sectors identified in the plan will change, and there is a commitment to keep the plan under review.
A better-informed strategy?
The analysis and tools published with the strategy have informed a much more targeted strategy for 2019-2029. However, the targets in the strategy remain fairly high level. While an export value gap is identified for all the priority 1 and 2 markets, we do not know whether the aim of the strategy is to close this gap entirely. Similarly, while output goals are set (increasing the GlobalScot network, trade envoys and in market specialists), we do not know what the Government expect these will achieve individually. Finally, we do not know precisely how the additional £20m of funding will be spent. As the Scottish Government reviews this strategy in the evolving political context, it may wish to consider specifying SMART targets and interim steps to measure the success of each action.
Andrew Feeney-Seale, Senior Researcher, Financial Scrutiny Unit
Blog image: “IMGP5752” by drake.siard is licensed under CC BY-NC-SA 2.0