Why is this National Indicator important?
Studies show that there is a strong correlation between higher spending on research and development (R&D) - particularly Business Expenditure on Research and Development (BERD) - and high rates of economic growth. R&D activity also demonstrates the strength of the economy in terms of having the required expertise, skills and business environment to undertake R&D activity. Innovation is crucial for businesses to maintain profitability and competitiveness and to provide high value products and services in a globalised, knowledge-based economy. Scotland's ability to achieve sustainable economic growth will be strongly influenced by our R&D performance.
What will influence this National Indicator?
Gross expenditure on R&D includes that of businesses, government and higher education. Government undertakes R&D itself, but also supports business expenditure through a range of Scottish Government innovation policies including grant support schemes and knowledge transfer initiatives. Further support schemes are also run by Scottish Enterprise and the Scottish Funding Council.
Scotland has positive performance indicators for our R&D in areas dominated by public sector decisions (e.g. higher education spend), but is weak in those areas dominated by the private sector, such as BERD. For example, Scotland is in the top quartile of EU regions for the overall regional innovation index, but in the third quartile for BERD. Part of Scotland's low BERD performance can be accounted for by the structure of the Scottish economy; however, the largest part is due to Scotland having relatively fewer R&D intensive businesses. Many of Scotland's key industries - e.g. financial services - spend more on innovation rather than traditional R&D, and there is an increasing focus on how best to capture this activity within the service sector.
What is the Government's role?
Government undertakes R&D itself. We also support business expenditure through a range of Scottish Government innovation policies including grant support schemes and knowledge transfer initiatives. Historically, the focus has been on promoting the scale and effectiveness of supply. Progress has been made in this - and there is scope for further refinement - but the real challenge lies in incentivising business demand. Changes in the support for business innovation and R&D came into effect on 1 April 2008. These make it easier for businesses to access funding from Government, while the restructuring of the enterprise networks to concentrate more on support for innovation, investment and enterprise should improve the demand from business.
How are we performing?
The gap in total research and development spending between Scotland and the EU has ranged from 0.18 to 0.34 percentage points in the last nine years. The latest change shows a decrease in the gap from 0.28 to 0.25 percentage points.
View data on research and development spending
Source: Scottish Government, Organisation for Economic Cooperation and Development
This evaluation is based on: any difference in the gap within +/- 0.01 percentage points of last year's figure suggests that the position is more likely to be maintaining than showing any change. A decrease in the gap of 0.01 percentage points or more suggests the position is improving; whereas an increase of 0.01 percentage points or more suggests the position is worsening.
For information on general methodological approach, please click here.
Scotland Performs Technical Note
Statistics Topic Page
Who are our partners?
Highlands and Islands Enterprise
Scottish Funding Council
Related Strategic Objectives
Wealthier and Fairer