PHILIP Grant, Lena Wilson and Jim McDonald each provide a more positive picture of Scotland’s economic prospects than most regular commentators who spend their time poring over the economic runes. There are a number of common themes.
First, they emphasise that there are no easy routes to economic growth that do not involve risk. Expanding in new markets and into new technologies inevitably involves taking chances.
With risk comes the possibility of failure. But an economy that never takes risks will never provide the kind of growth on which a successful social model depends.
Mr Grant is perhaps suggesting that in the past indigenous Scottish firms have been reluctant to take on big growth risks; they have also fallen well behind the UK average on research and development.
Prof McDonald clearly believes that working with the academic research community can provide the catalyst for improvement in Scotland’s commercial innovation performance, and there are some encouraging examples where this may be true.
There is also a need to be flexible enough to take advantage of opportunities as they arise. This can only happen if promoting economic development is central to the mission of all stakeholders – politicians, planners, workers and educators.
A second theme is the importance of education, particularly technical education. Yet increasing the supply of engineering graduates is not a guarantee that a ready demand will be available. Accountants, lawyers and other professionals have traditionally earned more than engineers and scientists.
UK and Scottish companies have focused on the short-term bottom line and not on the long-term vision of new products and technologies which underpin sustainable growth. Consequently, they have focused their rewards on those who deliver the bottom line. Changing this focus would involve a major change to UK business culture.
Britain will not become Germany overnight. There are many vested interests that would have to be overcome. One critical issue is how firms are financed – their capital structure.
The commentaries emphasise the need for optimism about Scotland’s prospects. Economic pessimism can be self-fulfilling. Selling Scotland as an inward-investment destination requires taking a positive view of its prospects. But optimism must be underpinned by realism.
The problem of youth unemployment is a major issue confronting the Scottish economy. Those who have a bad experience when they join the labour market can be affected for decades afterwards.
Improved technological education will help some of these into stable long-term employment. Enhanced focus on employability skills will help others find work. But there is still a lack of demand in the Scottish economy, which may to some extent be offset by expansion into new markets.
This will be a slow process, but it will eventually be to the benefit of all who have a stake in Scotland’s economic success.
• David Bell is professor of economics, Stirling Management School, University of Stirling.