A Trading Nation - Updating Scotland's Country and Sector Prioritisation

3. Data and Analysis

The analysis underpinning this update has used latest available data, from a range of sources^[5]. The final output of countries and sectors is then combined into a matrix showing country-sector relationships. The matrix illustrates which trading partner countries are likely to show more promise for increasing Scotland’s exports, and in which specific industry sectors. This matrix can be found in Figure 3 at the end of this document.

The sectors identified within the analysis of the goods sectors show that global demand for goods is likely to fit broadly into the following top five sectors:

• Chemical Sciences
• Food and Drink
• Machinery and Equipment (part of Engineering and Advanced Manufacturing)
• Manufacture of Computer, Electronic and Optical Products (part of Technology, Digital and Media)
• Transport Equipment

The sectors identified within the analysis of the services sectors show that global demand for services is likely to fit broadly into the following top 3 sectors:

• Engineering Services (part of Engineering and Advanced Manufacturing)
• Mining and Mining Support Services (subsector of Energy)
• Computer Programming, Consultancy, and related activities & IT and Telecommunications (part of Technology, Digital and Media)

Topical Box 2: The Rotterdam and Singapore Effect

The “Rotterdam effect” describes the distortion effect caused by the re-exporting of goods from regional “hub” economies. For example, Scottish exports to the Netherlands and Singapore are re-exported to other parts of Continental Europe or Asia, with little to no material change made to the products. When goods are re-exported, they are classified as exports from the re-exporting country and not the country of origin. In the context of Scottish exports, these would only show the initial exporting of goods to Netherlands or Singapore, and not the subsequent re-exporting of goods to different destinations, thus inflating Scotland’s export performance with these partner countries.

To account for this, analysis was conducted using data from the Netherlands’ Centraal Bureau voor de Statistiek (CBS). By taking the average re-export percentage for the UK and using that as a basis to adjust the export figures for Scotland the following can be found: (1) how much of the Netherlands’ UK imports are kept for domestic use and (2) how much are then re-exported to other destinations. The average re-export percentage of UK goods is 39% and the percentage of goods imported from the UK kept for domestic use was at 61%.

A similar approach was taken for Singapore. Using the re-export share of Singapore imports by broad industry category, analysis was able to estimate the share of Scottish exports to Singapore – based on the commodity mix – that are likely to be re-exported. For example, Singapore re-export over 95% of their global beverage imports. Using data on merchandise trade from the Singapore Department of Statistics, analysis showed that an estimated 77% of Scottish exports to Singapore are likely to be re-exported.