Economic development in Scotland

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Economic development in Scotland

SPICe has published a briefing on economic development in Scotland. The briefing provides an overview of the economic development landscape in Scotland. It looks at the main organisations involved in delivering economic development activities, the direction of economic development strategy, and current economic development programmes in Scotland.

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

What is economic development?

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

  • business support
  • targeted investment in and running of infrastructure
  • investment in skills and training
  • support for marketing, promotion and network building.

These interventions can have various purposes, including:

  • improving productivity
  • encouraging ‘greener’ activity
  • supporting innovation
  • generating more exports
  • promoting start-ups
  • encouraging inward investment
  • and getting people into good quality jobs.

It does not generally include measures to manage the economy such as fiscal policy (changes to tax, spending and borrowing), monetary policy (such as setting interest rates), or other regulatory measures (for example on price capping, environmental or safety standards, or labour market conditions).

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

Scotland’s economic development organisations

The key economic development actors in Scotland include:

  • Scottish Enterprise
  • Highlands and Islands Enterprise
  • South of Scotland Enterprise
  • Local government
  • Regional Economic Partnerships
  • Scottish National Investment Bank
  • Skills Development Scotland.

In addition to the economic development organisations and partnerships outlined, other publicly funded organisations with a role in economic development include:

  • VisitScotland
  • Transport Scotland
  • Scottish Funding Council.

Issues in measurement and a cluttered landscape?

Measuring the activities of the publicly funded economic development agencies against the Scottish Government’s budget and intended outcomes has been an ongoing challenge for parliamentary scrutiny. Over 20 years ago in 1999, there were concerns around this matter from a parliamentary committee, and despite the passing of time, a 2021 legacy report from a parliamentary committee concluded similar.

A ‘cluttered landscape’ has been something of a recurring theme when in it comes to economic development in Scotland. Over the last six years, we have seen some attempts at rethinking the ‘enterprise and skills’ landscape in Scotland, via the activities of the Enterprise and Skills Strategic Board. But the question is whether this has achieved the change that was originally anticipated, as some would argue the landscape is still cluttered.

Economic development strategy in Scotland – is there one?

There is no agreed definition of economic development activity, as already highlighted. However, since devolution in 1999, the Scottish Executive/Scottish Government has had some form of economic development strategy – the earlier strategies were framed as economic development strategies but more recently just tend to be called economic strategies.

The first strategy, following devolution, started out as direction for the then enterprise networks (these networks were abolsihed in 2007, as detailed in the briefing). Successive strategies gradually tackled wider social challenges and offered direction for the wider public sector, eventually arriving at the “One Scotland Approach” in the 2015 Strategy.

Over the last two decades, Scotland’s economic policy landscape has evolved from a narrow enterprise agency approach to a wider whole government approach. While there is merit to this more holistic approach to economic policy, it has weakened accountability, and makes evaluating what actually works all the more difficult. There have been no formal procedures in place to form an overall assessment of the success of successive economic strategies.

Funding programmes

Our new briefing details some of the key funding programmes, which support economic development in Scotland. These include EU Structural funds, and their proposed replacements, this year, the Community Renewal Fund, and next year, the Shared Prosperity Fund, as well as the (UK wide) Levelling Up fund. It also provides some details on:

  • Green Ports (the proposed Scottish version of Freeports)
  • City and Regional Growth Deals
  • enterprise areas
  • and some other programmes such as the Green Jobs Fund, the National Manufacturing Institute, and a Women’s Business Centre.

Frictions or synergies in strategy?

The briefing outlines a constant process of reorganising and reshaping governance arrangements across the economic development landscape over the last two decades in Scotland. This has been shaped by actors at local, Scottish and UK levels. The briefing explores whether this results in frictions or synergies for different places within Scotland to pursue economic development.

The overview of key funding interventions currently in delivery or planning across Scotland’s economic development landscape illustrates the varying policy levers that both the Scottish and UK Governments are pursuing, which are not always fully aligned. The economic development landscape is complex, and this complexity isn’t necessarily helped by the varying intentions of different public sector actors.

Alison O’Connor and Simon Wakefield,

Financial Scrutiny Unit, SPICe

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