Developing a Smart, Successful Developing a Smart, Successful ScotlandScotland

Charlie Woods - Scottish Enterprise

World Bank SeminarRiga - 8 June 2004

Introduction

Scotland – backgroundStrategic Challenges ‘Smart, Successful Scotland’Strategy into action

Scotland

Aberdeen

EdinburghGlasgow

Dundee

Inverness

Area 79,000 sq kmPopulation 5mn

GDP €115bnEmployment 73%

Output

Output

GDP per head 2002 ($ppp)

0

10,000

20,000

30,000

40,000

50,000

60,000

Turk

ey

Mexic

o

Pola

nd

Slo

vak R

epublic

Hungary

Czech R

epublic

Kore

a

Gre

ece

Port

ugal

New

Zeala

nd

Spain

OE

CD

Italy

Germ

any

Fin

land

Scotla

nd

Japan

Fra

nce

Sw

eden

Belg

ium

Unite

d K

ingdom

Austr

alia

Icela

nd

Austr

ia

Neth

erlands

Denm

ark

Canada

Sw

itzerland

Irela

nd

Norw

ay

Unite

d S

tate

s

Luxem

bourg

Agriculture2% Manufacturing

20%

Other production5%

Construction6%

Wholesale & Retail11%

Hotels & Restaurants4%

Transport & Comms7%

Financial & Business Services20%

Public Services20%

Other Services5%

Output

Food, Drink & tobacco17%

Textiles, Footw are & Clothing5%

Chemicals, petroleum products etc

14%

Engineering & Metals24%

Electronics etc23%

Other Maunfacturing17%

Share of GDP

Output

-35 -30 -25 -20 -15 -10 -5 0 5 10 15

Textiles

Other Man.

Health, Social

Transport equip.

Food & Drink

Mechanical Eng.

Paper & printing

Metals

Agriculture

Hotels & Restaurants

Public services

Construction

Education

Business Services

Utilities

Transport

Mining

Other services

Wholesale & Retail

Chemicals

Financial Services

Elec. Eng.

GDP annual average % change: Scotland

1995-2000 2000-2002

Manufactured Exports

0

2000

4000

6000

8000

10000

12000

14000

£mn

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

European Union Rest of World

0

2000

4000

6000

8000

10000

12000

£mn

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Electronics Other

Source: SCDI

Manufactured Exports

Share of Exports Q3 2002

Food, Drink & tobacco11%

Textiles, Footw are & Clothing3%

Chemicals, petroleum products etc

14%

Engineering & Metals18%

Electronics etc46%

Other Maunfacturing8%

Research potential

Number of 'selected staff' in subjects averaging more than 4.5 in 2001 RAE

0 50 100 150 200 250 300 350 400 450

Biological Sciences

Hospital-based clinical

Computer Science

Physics

History

Law

Veterinary Science

Mathematics

English

Clinical Lab Sciences

Electrical and Electronic Eng.

Accountancy

Theology

French

Art, Architecture, Design

Social w ork

Anthropology

Mineral and Mining Eng.

Linguistics

Mid east/African studies

new technologies new international

markets/partners more sophisticated

consumers pace of change global upturn

Opportunities

some world class firms key industries

existing and emerging research base graduate output international reputation international cities rural environment identity/size

Strengths output growth domestic demand productivity business starts growth/global firms business R&D skills demand excluded communities

and individuals

Weaknesses

price competition emerging competitors obsolete skills population change

decline/ageing global uncertainty

Threats

Key strategic issues for Scotland

‘Cumulative Causation’even more potent in the knowledge economy

0

1

2

3

4

5

6

%

-40

-20

0

20

40

60

80

London East England South East Scotland North East Wales

Net movement of graduates as a proportion of graduate output (1997-2000)

0

0.5

1

1.5

2

2.5

3

EastEngland

South EastEngland

England North East Scotland Wales

R&D Spend as % of GDP (1999)

University Business

New Company Incorporations

0

2

4

6

8

10

12

14

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

0

50

100

150

200

250

Scotland (left) Enland & Wales (right)

0

0.5

1

1.5

2

2.5

3

Switz. Sweden USA UK Neth. Finland Denmark Japan Scotland France Germany

Global Companies per million population (Business Week 1000)

-15

-10

-5

0

5

10

15

20

percentdifference

from UK average

Regional productivity gap, 1999

Income

Migration

HQs

R&D

New starts

Productivity

Business R&D

200

250

300

350

400

450

500

550

1994 1995 1996 1997 1998 1999 2000 2001

£mn (

2000

price

s)

2

2.5

3

3.5

4

4.5

Scotland as % of UK

Innovation 0

5

10

15

20

25

London South EastEngland

East England North East Scotland Wales

Proportion of Working Age population by Highest Qualification (2001)

Degree No qualification

Skills

Global ConnectionsGlobal Connections•greater digital connectivity•increased global involvement •a globally attractive location•more people choosing to live and work in Scotland

Growing BusinessGrowing Business• greater entrepreneurial dynamism and creativity•more e-business•increased commercialisation of research and innovation•global success in key sectors

Learning & SkillsLearning & Skills•improve the operation of the labour market•the best start for all young people•narrow the unemployment gap•improve demand for high quality in-work training

Smart, Successful Scotland

Overall ObjectiveStandard of Living (GDP/head)

Growing Business Global Connections Learning and SkillsHigh growth firms (starts) Broadband cost/coverage Employment rateBusinesses trading online Companies Exporting 16-19 not in emp/ed/trn

Business R&D Graduates in workforce Unemployment GapLabour productivity Working age net migration In work training

Long term aspiration - top quartile OECD Top quartile 2nd Quartile 3rd Quartile 4th Quartile

Themes and Priorities

Measurement Framework

Scottish economy performance gap summary(distance from average of OECD* top quartile)

0 10 20 30 40 50 60 70 80 90 100

Employees in training

Working age EET

Unemployment 15-24 yr olds

Employment rate

Net migration

Graduates in labour force

Exports as % GDP

Cost of broadband (UK)

Productivity

Business R&D

On-line trading

High growth starts

GDP/Head= Scotland

= gap

38,000

144,000

115,000

99,000

£7,000

14,000

133,700

£930mn

£4.25/hr

140 Euros

£1,985mn

209,000

27,000

%

* or nearest available comparator

Absolute size of gap

The Scottish Enterprise Network

Purpose: a strong economy - sustainable economic growth

Pursuing national priorities - sensitive to local needs and opportunities Addressing ‘market failure’

Focussed on the customer

Working with partners

A catalyst for more/better/faster investment Finance/knowledge/connections

Projects integrated for maximum impact

Growing Business: Priorities and Projects

Stimulating commercially successful innovation e.g. Intermediary Technology Institutes (Energy, Life Sciences, Techmedia),

Proof of Concept, Enterprise Fellowships, R&D incentive Realising high growth potential in companies

e.g. account/client management, Co-investment fund, investment readiness, high growth start up unit, advanced e-business

Stimulating greater entrepreneurial activity e.g. Business Gateway

Industry focus for integrating action Energy, Biotech, Microelectronics, Tourism, Financial Services, Food &

Drink, Forest products, Creative Industries

Headline progress measures 2004/05 Business starts 9,000 - 10,000 High growth starts 150 - 200 Account managed improvements 340 - 400 Knowledge transfer 100 - 120

2004/05 budget £125 - 135mn

Growing BusinessGrowing Business• greater entrepreneurial dynamism and creativity•more e-business•increased commercialisation of research and innovation•global success in key sectors

Global Connections: Priorities and Projects

Supporting and attracting global businesses e.g. ‘knowledge-in/knowledge-out’, Scottish Development International,

Global Companies Development programme Global business infrastructure

e.g. ‘Broadband for Scotland’, Route Development Fund Major strategic place development

e.g. Investment plan (Clyde Regeneration, ‘St Andrews World Class’ etc) Attracting and retaining talented people

e.g. Talent Scotland, ‘Fresh Talent’

Headline progress measures 2004/05 Business Internationalisation 720 - 850 High value Inward Investment 1,000 -1,300

2004/05 budget £125 - 135mn

Global ConnectionsGlobal Connections•greater digital connectivity•increased global involvement •a globally attractive location•more people choosing to live and work in Scotland

Learning & Skills: Priorities and Projects:

Realising workforce potential Young People - MAs, Skillseekers, Get Ready for Work, career education Adults - MAs, Training for Work, PACE, career education Business - BLAs, IiP, industry skill plans

Reducing information failures in the labour market e.g. All age careers planning and support, Future Skills Scotland

Stimulating an enterprise culture e.g. Enterprise in Education

Headline progress measures 2004/05 Career planning 175,000 - 190,000 Occupational Training 41,000 - 46,000 Positive Outcomes from training 16,000 - 19,000 SME workforce development 2,300 - 2,600

2004/05 budget £185 - 195mn

Learning & SkillsLearning & Skills•improve the operation of the labour market•the best start for all young people•narrow the unemployment gap•improve demand for high quality in-work training

Cross cutting priorities

Sustainable Development increased resource productivity new ‘green’ business opportunities

Social Justice stimulating employment opportunities close to under-performing areas helping people close to the labour market access opportunities

Rural Development ‘mainstream’ programmes tailored to market failures and unrealised

potential in rural areas Transport

economic intelligence for transport investment incentives to ‘prove’ new routes

Equal opportunities addressing unrealised economic potential e.g. business

starts by women

Making the connections

‘BioDundee’

Colleges Biotech Consortium

Life Sciences ITIProof of Concept Fund (36% Biotech)

Global ConnectionsGlobal Connections•greater digital connectivity•increased global involvement •a globally attractive location•more people choosing to live and work in Scotland

Growing BusinessGrowing Business• greater entrepreneurial dynamism and creativity•more e-business•increased commercialisation of research and innovation•global success in key sectors

Learning & SkillsLearning & Skills•improve the operation of the labour market•the best start for all young people•narrow the unemployment gap•improve demand for high quality in-work training

SustainableEconomic

Growth

Education

Private Partners

Skills & Learning

Public Partners (EU Partnerships, Local Government, Funding councils etc)

GlobalConnections

GrowingBusiness

InfrastructurePlanning

Making the connections

Scottish Enterprise Network

Research