What is A Trading Nation?
In short, it’s a plan for growth that will underpin our efforts to substantially grow Scotland’s export performance and that sets out the actions we will take to do that. It provides a robust evidence base that helps us to better understand where Scotland performs well in exporting and where there are potential trade opportunities that we’re currently not exploiting fully. That’s important for a couple of reasons. We need to understand where our strengths lie so that we can protect those and ensure that we don’t lose market share in areas where we currently perform well, particularly as we enter a period of real uncertainty in terms of what our future trading relationships are likely to be. We also want to be able to identify where there are markets and sectors that we’re either not yet exploiting, or taking full advantage of, but that will help us to shift the dial and achieve a real difference in the growth of our exports.
Having that understanding and that evidence base also enables us to make important decisions about where we focus our resources and the types of interventions we make.
The latest Programme for Government outlined a substantial investment package for trade of £20mn over 3 years. This is over and above investment in international activity that our enterprise agencies are making over the same period. We want to ensure that this investment to support export activity – not just in terms of the money we spend but how we deploy the people we have on the ground – is targeted on where it will have the biggest impact by driving growth in exports, while maintaining our commitment to promoting democracy, the rule of law and human rights across the world. Of course, it’s not just about what the Scottish Government does. We work with a whole range of partners on exporting activity and it’s about how collectively we use our resources to make sure we’re putting them to best effect.
Why do we need a plan for export growth?
Scotland's export performance has continued to improve in absolute terms. Data shows that the overall trend for Scottish export value has increased every year since 2005 and that we now export over £30bn worldwide.
While the value of exports has grown in recent years other data shows that we haven’t internationalised our economy to the extent that we can and should and that exports as a percentage of GDP have remained largely flat over the past 20 years. To change this requires a change in approach. We need to refocus our efforts on countries, sectors and businesses where there is demonstrable scope to shift the dial on our export performance – that is where our analysis gives us the evidence we need to do that.
We already have world class businesses trading successfully across the globe. We must do more to help these businesses to innovate and improve their products which can help them export more in their current markets and help them diversify into new markets where there is a demand for their goods and services.
While I want to see an increase in the value of Scottish exports I also recognise that we need to see an increase in the number of businesses in Scotland that export. That will generate additional value for the Scottish economy – creating benefits for all of us across our communities – and ensure that our export base is diversified and more resilient. This plan includes support to help businesses move into exporting, for example, the First Minister’s Export Challenge, a business-to-business mentoring programme. This plan covers only a small part of the existing wider business support environment which can help businesses to grow and to build capacity and capability to become exporters.
Why the focus on exports?
As Scotland takes on more tax raising powers it’s critically important that we expand the business base and ensure that Scottish businesses fulfil their growth and productivity potential. One of the most effective ways for them to do that is to internationalise, to enter new markets and to grow their existing exports. We want to create the right conditions and provide the right support for them to do that. There are a number of reasons the Scottish Government is putting a much greater emphasis on export growth. In broad terms, a better net trade position helps to create a more balanced, sustainable economy bringing greater prosperity and jobs. That in turn will help to support a more inclusive economy where the benefits of trade are shared across the country.
Coming from a business background and having worked in a number of overseas markets, I have first-hand experience of how businesses that trade internationally tend to be more innovative, more productive and more competitive. Exposure to global competition and international standards drives business improvement. Figures from the Office of National Statistics suggest that, while only around 3% of businesses actually export, these businesses account for 60% of UK annual productivity growth and are, on average, 70% more productive than businesses that don’t export. We also know that businesses and economies operating across a range of markets will tend to be more resilient and less vulnerable to economic shocks.
I also want Scotland to grow its international profile and presence. We have a lot to offer as a nation and international trade forms an important mechanism through which Scotland can enhance its place in the world. I want a Scotland that is confident and outward facing and that showcases its strengths and capability through trade and the exchange of ideas and people. Building international relationships and our reputation as a good global citizen through trade also enables Scotland to exert a positive influence on our international partners. This will become increasingly important in a post Brexit environment.
Where does this plan fit in with the other economic strategies and the wider strategic landscape?
It’s strongly aligned with our National Performance Framework, Scotland’s Economic Strategy, our innovation strategy and with the Economic Action Plan. It builds on the export element of our existing trade and investment strategy. I’m very clear that it complements those.
Internationalisation runs strongly throughout all these documents and I see A Trading Nation as an extension of those – a mechanism that really lets us drill down to what the evidence is telling us in terms of where the opportunities are, what our priorities should be and what actions we will take a result of all that. I’m also very clear that this needs to be a living plan that will be kept updated and relevant. We need to be able to take account of changing circumstances and adapt our response to those accordingly.
And finally, who is A Trading Nation for?
As I’ve already indicated, A Trading Nation is for everyone working to grow Scotland’s exports to provide them with the evidence base that will shape their priorities and direct their resources most effectively. I think it’s also important that businesses find it a useful resource to identify potential international markets and opportunities as well as the advice and support that’s available to help them access those. Ultimately it’s businesses, not government, that will deliver the export growth that will really make a difference to the Scottish economy.
Ivan McKee MSP
Minister for Trade, Investment and Innovation