Analysis: A word about the wisdom of the Scottish way

WHETHER it’s the banks, the eurozone or rising unemployment, the media has been relentless in its coverage of economic meltdown.

Last week’s Budget was an overdue admission that austerity alone cannot meet the UK’s target to reduce its national debt given the weakness of the growth outlook, and that further tax rises will be required.

No wonder, then, the consistent economic narrative appears to be “everything is bad and getting worse, everywhere”.

Well, not quite. The latest figures on gross value added at local level demonstrate just how well the Aberdeen and Edinburgh economies are doing given the circumstances.

Considerable efforts have been made in developing and marketing Aberdeen as a centre for oil and gas engineering, and to diversify into sectors such as renewables.

In Edinburgh, the resilience of the financial services sector reflects the importance insurance and fund management. At the same time, higher education, life sciences, tourism and other sectors continue to provide a broad platform for growth.

While the vision of the leading private sector companies that drive these economies is crucial, there is a second critical factor at play – the importance of good economic development policy.

Scottish Enterprise started thinking about how to secure Aberdeen’s long-term future at least 20 years ago.

So, too, in Edinburgh, where it has been active in supporting life sciences from the start, and where the city council has long been leading a debate about how to make the right policy choices in a global economic environment.

There are signs of economic vitality in Scotland’s other cities, too – the Scottish Government’s focus on renewable energy technologies is clearly paying dividends in Dundee and Glasgow.

And if you doubt that there is good news around, simply go to a major English provincial city. Scotland has a government and economic development system that is positioning our cities for the future. In England, the coalition has abolished the regional development agencies when they were perhaps most needed.

• Iain Docherty is professor of public policy and governance at the University of Glasgow Business School