Context Economic Regional development theory/policy
Scottish Enterprise Key features Relationships/accountability Strategy Operating Plan New directions Measuring progress
Conclusions Evolving strategies and approaches Key features of an effective development agency
Introduction
Productivity drivers - average ranking
0
2
4
6
8
10
12
South East London East ofEngland
SouthWest
Scotland NorthWest
EastMidlands
WestMidlands
N Ireland Yorks-Humber
Wales North East
Private Sector Knowledge Intensity
GDP per head (% of UK ave)
70
80
90
100
110
120
130
140
1972 1982 1992 2002
London SouthEast West Midlands Northw est
Scotland East North East Yorkshire Humberside
East Midlands Southw est Wales N Ireland
Dynamic self-reinforcing development
Innovation, enterprise, creativity, skills, investment
Source: Martin 2005
Source: National Statistics
technological advance global markets/partners demanding consumers new business models sustainable development pace of change
Opportunities
world class firms competitive industries
existing and emerging research base graduate output international cities natural resources history/culture international reputation identity/size
Strengths size of domestic demand productivity business R &D business starts growth/global firms migration? infrastructure wasted human potential insufficient urgency
Weaknesses
more intense competition new competitors internal fragmentation unsustainable dependency population change global uncertainty
Threats
Strategic issues for the Scottish economy
Centrifugal v centripetal forcesEfficiency plus equity objectivesGreater focus on sustainable productivity growth
Innovation/enterprise/learning (‘innovation systems’)
More emphasis on understanding regional potential/market failure – endogenous growth
Less a zero sum game of ‘beggar your neighbour’ Less focus on attracting external investmentLess subsidy - more catalyst Benefits - regional, national and multinational
Regional development theory/policy
The Scottish Enterprise Network
Purpose: a sustainable and measurable impact on the Scottish economy
Pursuing national priorities – building on local potential Focal customer - businesses with potential
to make disproportionate impact
Addressing ‘market failure’
A catalyst for more/better/faster investment Finance (<5% total investment)
• ‘investment alliance’ with partners
knowledge/connections
Projects integrated for maximum impact
ContractorsContractors
Scottish ExecutiveScottish Executive
Scottish ParliamentScottish Parliament
Legislation - budget scrutiny – Committee enquiries
Sponsor division - Board appointments – Policy/Strategic direction (dialogue) – Finance – Joint Performance Team –
Operating Plan – operational teams
Strategy – Operating Plan - Staff - performance measures – Network products – delegated authority -
appraisal guidance – evaluation – peer groups – shared services/systems
Local Enterprise CompaniesLocal Enterprise Companies
Scottish EnterpriseScottish Enterprise
Accountability/Relationships
PartnersPartners
Cu
sto
mers
Cu
sto
mers
Delivery Delivery vehiclesvehicles
Strategic dialogue e.g. Scottish Funding Council (HE/FE) - joint projects - ‘LEFs’/Community Planning –
metro plans – industry plans
e.g. ‘Business in the
Parliament’
Smart, Successful Scotland - refreshed
Global ConnectionsGlobal Connections•increased involvement in global markets•a globally attractive location•connecting to the rest of the world•more people choosing to live, study and work in Scotland
Growing BusinessGrowing Business• a a culture of enterprise and more businesses of scale•increased innovation and commercialisation of research•success in key sectors•e-business to create business advantage
Skills & LearningSkills & Learning•improve the operation of the Scottish labour market•the best start for all young people•developing people in work•narrow the gap in employment and reduce inactivity
•‘Enterprise Strategy for Scotland’ – partnership emphasis•Stronger spatial dimension
Cross cutting themes:•Sustainable development – green jobs strategy•Closing the opportunity gap
EducationFE/HE
Communities ScotlandJC+
Sector Skills Councils
Private Investment (Individuals, Companies, Industry groups, Trades Unions, voluntary organisations etc)
Skills & Learning
Public dependencies (Executive, Local Government, Funding councils, EU Partnerships etc)
GlobalConnections
GrowingBusiness
Infrastructure - waterPlanning
Promotion of Scotland
Success through Partnership‘An investment alliance’
Scottish Enterprise Network - Investment catalyst (<5%)
Business developmentResearch, K-transferSMART/SPUR/RSA
Determined to SucceedVisitScotland
Sustainableeconomic
development
Growing BusinessEnterprise: Young peoples start up grant, ‘women into business’Company development: Business Gateway, high growth start up
unit, account/client management, Companies of Scale, lean management
Innovation: Proof of Concept Fund, Enterprise Fellowships, Intermediary Technology Institutes, R&D Plus
Growth Capital: Co-investment fund, Business Growth Fund
Global ConnectionsInternational markets: Scottish Development International (R&D
focus), Global companies programme, Globalscot, Talent
ScotlandInternational connections:
‘Broadband for Scotland’, Route Development Fund
Attractive location: Investment plan (e.g. Clyde Waterfront)
Learning & SkillsLabour Market : Careers Scotland,
FutureSkills ScotlandCompany programmes: Investors in
People, construction skillsSkills Programmes: Modern
apprenticeships, Training for Work, Get Ready for Work
Major redundancies: PACELinking Opportunity and Need
Operating Plan Summary
Type of intervention
More ReactiveBuild capacity to change
More ProactiveStimulate change
•International•Account management•Infrastructure•Investment capital•Investment incentives•Market intelligence
Higher RiskLonger term
Lower RiskShorter term
High Quality services:•Business advice•Volume training•Careers advice
•'Game changers' e.g. ITIs •Emerging industries, markets, technologies•Enterprise culture•Innovation system
Priority Industriesclearer focusing of demand on
what will grow Scottish economy in an international context
Metro regions•more responsive delivery e.g. business development, skills,
infrastructure•recognition of dependencies
•international scale
Smart Successful Scotland •addressing policy direction•achievement of objectives
A multi dimensional business
Scottish Enterprise Operating Plan
Significant growth opportunities for Scottish economy
Growth potential Significant Scottish strength
and/or potential Corporate/research
SEn role in realising potential Opportunities to develop major
players Industry leadership Innovation system Greater, more focussed
business demand
Priority Industries
Food & Food & DrinkDrink
EnergyEnergy
TourismTourismFinancial Financial ServicesServices
Life SciencesLife Sciences Electronics Electronics MarketsMarkets
Advanced EngineeringAdvanced Engineering Electronics capabilitiesElectronics capabilities(Software, micro,opto etc)(Software, micro,opto etc)
TextilesTextiles AerospaceAerospaceShipbuildingShipbuilding & Marine& Marine
ChemicalsChemicals ConstructionConstruction ForestForest IndustriesIndustries
“ “Regional” PrioritiesRegional” Priorities
National PrioritiesNational Priorities
Global ConnectionsGlobal Connections
Growing BusinessGrowing Business
Learning & SkillsLearning & Skills
Life Sciences ITIProof of Concept Fund (1/3 Life Sciences)
Colleges Biotech Consortium (lab
technicians)
Specialist accommodation
‘BioDundee’
Cities & Regions
Metro Region collaboration for
global scale
Core cities boost regions by providing:
A critical mass of knowledge institutions
A vibrant environment for knowledge creation and transfer
Strategic business and financial services
‘Connectivity' - attracts higher value business functions
Highly paid jobs A concentration of culture,
leisure and sport Transport hubs National and international
profile
Successful 'core cities' critical
But cities rely on regions for:
Space for major economic and infrastructure projects
A wider range of housing options
Distinctive urban centres with niche retail experiences
A wider range of business sites and premises
A wider workforce and skills base
Opportunities for countryside leisure
'Customer' feedback on reputation and performance
‘Cities Regions and Competitiveness’ 2003 (ODPM)
‘Cities are the 'powerhouses' of modern economies’ – global scale
“A region will be successful if its cities are successful and cities will flourish if the wider region flourishes.” European Commission (2005)
“One message for Core Cities and RDAs is that their counterparts in Europe are convinced that to be competitive in the global marketplace in future they have to organise and act at a wider metropolitan or sub-regional level.” Competitive European Cities, Parkinson et al (2004)
Scotland’s economic geography
Network Ops East
Network Ops West
National Planning Framework Scottish Enterprise Network
•Economic geography matters more in setting investment priorities - but boundaries matter less, and will vary
• Need for scale, connectivity (physical and psychological), flexibility, speed + local engagement
Measuring Progress - Inputs to impact
INPUTSStaff/project finance
ACTIVITIESR&D Plus, account management, Co-investment, Proof of concept
OUTPUTSCompanies assisted, spin outs,
investment levered
OUTCOMESBusiness R&DProductivity
IMPACTGVA
Relative ease of measurement
High•Short term•Clearer attribution
Low•Long term•Many influences•Counterfactual
Performance Committee
SSS FrameworkEvaluation aggregation
Macro modelling
Investment Committee
Strategic project milestonesProgramme evaluation
Operations Committee
In year measurementCustomer survey
SSS Measuring progress – 2005 Report
“A significant challenge that remains is to achieve a decisive and sustained breakthrough in the indicators of the strength of Scotland’s business base, through building up the stock of businesses, raising their levels of innovation and productivity and increasing their global competitiveness.”
http://www.scotland.gov.uk/Topics/Business-Industry/Enterprise/17684/9530
Innovation/technology/higher value add technology transfer - knowledge transfer - ITIs
Start ups and business development Small Business Division – ‘Business birth rate’ - Business Gateway – account
management, companies of scale Corporate Investment
Direct investment - co-investment Internationalisation
Exports - international JVs Volume FDI - mobile R&D Attracting financial investment - attracting talent
Infrastructure Physical (e.g. SECC) - broadband/air routes
Property Advanced factories - innovation centres – specialist property Direct provision - co-investment
Industry focus Sectors – Clusters - Priority Industries
Geography focus Area projects/Regional Offices/LECs/Metro regions
Strategic Regeneration GEAR - Clyde Waterfront - LOAN
Skills ‘Unemployment schemes’ – Workforce Development (MAs – Futureskills Scotland)
Measurement Inputs – outcomes/impact
Evolving strategies and approaches
Cross cutting themes:Sustainable development•Innovation source•Resource productivityClosing the opportunity gap•Unrealised potential
Features of an effective development agency
takes a strategic, long term view has a local, national and international perspective integrates a wide range of powers and resources designs and implements bespoke solutions responds quickly and flexibly to opportunities is innovative and enterprising takes calculated risks works in effective partnership with the public and private sector has the human and financial resources to be credible and make an
impact is publicly accountable but arms-length from government
accountable to Parliament - Ministers set policy and strategic objectives…… ……. but step back from detailed planning and implementation easier to take difficult short term decisions which have longer term benefits helps the important to take precedence over the urgent provides environment to develop an innovative, risk taking culture allows more scope to recruit those that don’t see their long term future in
the public sector