Publication - Strategy/plan

Scotland's Economic Strategy

Published: 3 Mar 2015
Economic Development Directorate

Scotland’s Economic Strategy sets out a framework for a competitive and fairer Scotland.

Scotland's Economic Strategy
Executive Summary

Executive Summary

  • Scotland's economic prosperity depends upon the strengths and talent of our people, our natural resources, our infrastructure and how we are governed. The overarching economic and regulatory environment in which we operate also determines key social and environmental outcomes.
  • Scotland is a wealthy and competitive economy by international standards. However, many similar-sized economies perform better, not just economically, but also on measures of equality, wellbeing and sustainability.
  • In doing so they have delivered more sustainable, resilient and inclusive levels of growth.
  • This strategy sets out our ambition to create a more cohesive and resilient economy that improves the opportunities, life chances, and wellbeing of every citizen in our country.
  • Our purpose of creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth remains at the centre of our approach.
  • In doing so however, we are strengthening our approach to ensure that everyone in Scotland has the opportunity to fulfil their potential.
  • Our approach is therefore based on two key pillars: increasing competitiveness and tackling inequality.
  • Boosting competiveness is key to supporting long-term economic growth. This relates to our ability to help new Scottish businesses to develop by supporting entrepreneurialism and access to finance, encouraging companies to become more innovative and to exploit new commercial opportunities, and to help businesses to grow and expand both at home and overseas.
  • Increasing Scotland's economic performance also requires us to develop the human capital and productivity of all our workforce, to invest in Scotland's infrastructure and to increase the ability of people to participate in the labour market in Scotland.
  • We have taken significant steps to boost Scotland's long-term competitiveness. This includes introducing the most competitive business rates scheme in the UK, investing £11 billion in Scotland's infrastructure in the three years to 2015-16, establishing the Curriculum for Excellence to raise ambition and attainment in our schools and expanding the level of funded childcare to help families with young children participate in the labour market. We will build on these actions by establishing a Scottish Business Development Bank to support SMEs in Scotland with high growth potential, taking forward a package of measures to boost business investment in innovative activity including establishing a new Ministerial-led Innovation Forum; and providing 30,000 new Modern Apprenticeships every year by 2020.
  • In addition to increasing competitiveness, we must also reduce inequality. The international evidence is clear - that promoting competitiveness and addressing inequality are interdependent. Reducing inequality is not only important in itself, but is vital to creating the conditions to deliver sustainable economic growth over the long term.
  • Growing inequality has however, become an increasing feature across many advanced economies. This has been driven, in part, by global forces, changes in technology and the global regulatory environment and has been exacerbated by the impact of the global recession.
  • We are implementing a range of policies as part of this strategy which will make a difference. These include an agenda for fair work, the Scottish Business Pledge, support for the living wage and gender balance on corporate boards.
  • Many of the key levers for addressing both competitiveness and inequality however, remain reserved to the UK Government. The strategy sets out our approach within areas of current responsibility of the Scottish Government but also makes the case for key priority powers - particularly over the economy and welfare - to be transferred to Scotland.
  • In developing the Scottish Economic Strategy, we have built on our distinct Scottish approach, our focus on outcomes and our commitment to partnership working.
  • In order to achieve our ambition we require a whole economy approach, where partnership working and alignment are ever more significant, with a greater focus on key social and economic policies and a commitment to drive change.
  • The core elements of our economic framework are summarised below.
  • The new framework signals a clear direction of travel for all levels of government in Scotland. It involves a much broader approach to boosting competitiveness and tackling inequality through a full integration of our economic and social policies.
  • We believe that a One Scotland approach is needed to deliver on our ambitions, with all public sector agencies working together - recognising that all can and should make a contribution towards that growth - as well as the private sector, the third sector, and our universities and colleges.
  • Within Scotland's Economic Strategy there are four broad priority areas where our actions will be targeted to make a difference - investment, innovation, inclusive growth, and internationalisation.

Figure E.1: Scotland's Economic Framework

Figure E.1: Scotland's Economic Framework

Actions to deliver the four priorities for sustainable growth

Investing in our people, infrastructure and assets we will:

  • Invest in Scotland's people at all stages of life to ensure that we have a well-skilled, healthy and resilient population and an innovative, engaged and productive workforce;
  • Provide the physical and digital connectivity needed to ensure that all of Scotland is open to the national and global economy and is able to access high quality public services;
  • Invest in Scotland's infrastructure to help Scottish businesses to grow, innovate, and create good quality employment opportunities;
  • Prioritise our investment to ensure that Scotland protects and nurtures its natural resources and captures the opportunities offered by the transition to a more resource efficient, lower carbon economy; and
  • Invest in strengthening the success and resilience of local communities.

To foster a culture of innovation we will:

  • Support the development of highly innovative businesses across the Scottish economy;
  • Encourage more of Scotland's diverse business base to engage in innovation and research and development as part of their day-to-day activities;
  • Continue to support the high-impact, world-class research of Scotland's Universities and improve levels of commercialisation of academic research;
  • Develop with key partners, such as business organisations and trade unions, innovative approaches to developing progressive workplace practices; and
  • Develop and deliver new approaches to public service reforms and make better use of our public procurement to drive innovation.

To promote inclusive growth we will:

  • Promote Fair Work and build a labour market that provides sustainable and well-paid jobs;
  • Address long-standing barriers in the labour market so that everyone has the opportunity to fulfil their potential;
  • Tackle cross-generational inequality through, for example, improved child care, boosting attainment and early years interventions that give every child a fair start in life; and
  • Realise opportunities across Scotland's cities, towns and rural areas, capitalising upon local knowledge and resources to deliver more equal growth across the country.

To enable Scotland to take advantage of international opportunities we will:

  • Support Scotland's exporters to grow into new markets and expand their presence in key traditional markets such as the EU and North America;
  • Encourage a more export-orientated focus across all businesses and sectors in Scotland, and in particular amongst our small and medium sized enterprises;
  • Create the underlying conditions which will continue to make Scotland a major destination for investment;
  • Use Scotland's influence in Europe and more widely to support our international ambitions and continue to make the case for Scotland to remain a member of the EU;
  • Promote Scotland's international brand and showcase both Scotland and Scottish goods and services internationally and secure major international cultural and sporting events; and
  • Publish an International Framework, which will set the context for how the Government, its Agencies and Public Bodies, engage externally to promote Scotland - its economy and broader interests - and influence the world around us.

Figure E.2: Four priorities

Figure E.3: Four Priorities

  • As set out in the framework above, our approach to delivering sustainable economic growth is characterised by four key priorities:
    - An economy where growth is underpinned by long-term sustainable investment in people, infrastructure and assets;
    - An economy where growth is based on innovation, change and openness to new ways of doing things;
    - A society that promotes inclusive growth and creates opportunity through a fair and inclusive jobs market and regional cohesion to provide economic opportunities across all of Scotland; and
    - A country with an international outlook and focus, open to trade, migration and new ideas.
  • To reach our ambition we will target our economic policies to our competitive strengths whilst also supporting growth across the wider economy and all communities. This will involve a greater focus on strengthening and developing the skills of all our people, and local economies. We will promote innovation, skills and training and international ambition across the Scottish economy.
  • At the same time, our strategy will align our approach to social justice with our economic policies. For example, we will take greater account of the links between the formal and unpaid care services provided by individuals and the economy.
  • We will also support the important role organisations across Scotland have - whether voluntary organisations, third sectors partners or through informal relationships - which together empower local communities and underpin the structures which many individuals rely on to participate within society.
  • We will also protect and enhance our natural capital, our brand and reputation as a country of outstanding natural beauty, our commitment to low carbon and the opportunities our resources and assets provide for our economy and future generations.
  • In summary, Scotland's Economic Strategy sets out an overarching framework for a more competitive and a fairer Scotland. It sets out the strategic direction for current and future Scottish Government policy.
  • We are already closing the gap in productivity between Scotland and the UK and, if we are successful in each of our four priority areas, we would expect to see further growth in productivity. Our ambition remains to reach the top quartile of OECD countries in terms of productivity. We also aim to be in the top quartile of countries in terms of wellbeing, inequality and sustainability. In addition, we aim to reduce disparities in economic performance between regions and local areas within Scotland.
  • We will measure progress through the National Performance Framework. As part of the development of our strategy we are updating the framework to reflect our new strategic approach.
  • This will include a programme of work, to be undertaken in conjunction with the new Council of Economic Advisers, to develop a set of measures of Scotland's performance across a wider range of dimensions of economic prosperity to enable us to achieve a better assessment of progress.


Email: Natalie Hemmings,