The cost of living crisis is causing an unprecedented financial squeeze on families and households across the world as inflation continues to soar, and policymakers are looking to eke out every last penny in the public purse to set our economies on a path toward prosperity and wellbeing.

Scotland is no different – and as well as tackling the immediate economic pressures caused by the pandemic, Brexit and the war in Ukraine, Scotland has a legacy of economic underperformance which has troubled governments of all parties for generations. 

The Scottish Government is taking laudable steps to address these economic conundrums, and central to this will be the National Strategy for Economic Transformation (NSET), published last month. At a time when living standards are falling sharply and productivity growth is weak, a strategy that seeks to deliver a wealthier, fairer, greener country is most welcome.  

However, the strategy’s success will depend on two factors: a clear vision for delivery, and its ability to draw upon a 'national endeavour', bringing together the collective strengths of individuals, communities, and organisations across all sectors and regions of Scotland.

"the Innovation Strategy offers us a potentially generation-defining chance to... create a new industrial legacy for Scotland"

The nation's universities are a hugely important member of 'Team Scotland' and are key economic actors in their own right.  

For example, the University of Glasgow’s recent economic impact report, estimated that the University generates £4.4 billion of economic impact within the UK. The University’s research activities alone account for £1.8 billion of economic impact, most of which is captured by the private sector in the form of productivity gains. 

Scotland’s universities contribute to the economy on myriad fronts. They produce highly skilled graduates and are significant employers within their regions. They create successful spin-outs and social enterprises, with three Scottish universities featuring in the top 20 in the UK for the total number of spin-out companies generated1. Their world-leading research acts as a magnet for inward investment, regional cluster building, and provides a strong foundation for Scotland to establish a leading position in emerging and disruptive technologies and industries. 

This is a record of which we are rightly proud, but it is only beginning. The Scottish Government’s upcoming Innovation Strategy is a critical opportunity for all actors in this space – government, industry, communities, and universities – to foster an innovation ecosystem that helps the Scottish economy meet its full potential and find solutions that help tackle society’s greatest challenges whilst creating good quality jobs and retain wealth creation in Scotland. In doing so, the Scottish Government must be laser-focused in setting out its aspirations for the Innovation Strategy and in clearly articulating the priority outcomes for delivery.  

Whilst Scotland has real strengths, particularly its highly educated workforce and levels of higher education research and development spend, it also faces several challenges. Both the Muscatelli Report and NSET point to areas of relative underperformance that must be overcome if Scotland’s economic ambitions are to be realised.

Of most note are:

  • the persistently low rate of business start-ups
  • the gender gap in relation to start-up rates
  • the lack of a critical mass of scale-ups
  • weak business investment in R&D
  • skills gaps
  • inter-regional disparities
  • and structural inequalities that mean that economic opportunity is unequally distributed.        

What should be in the new Innovation Strategy? There is much alignment between NSET’s Programmes of Action and the key recommendations of the Muscatelli Report around how to drive innovation, which should provide the building blocks of the new Strategy.  

Both emphasise the importance of setting out priority areas in which Scotland has a genuine competitive advantage, building on existing areas of strength in our business base and in the discovery driven research of our world-leading universities.

Areas like life sciences, precision medicine and med-tech, AI and data science, and quantum technologies are prime examples. As a small country, we cannot afford to spread ourselves too thinly. We should instead focus on the clusters of excellence within each region that will deliver the greatest impact in terms of quality employment, resilience, and green economic growth.  

Government and its agencies can also play a role in ensuring collaboration and coordination for Scottish bids to UK funding streams, and in ensuring that government investment streams incentivise research activity that leads to the desired outcomes. For example, analysis by Trinity College, Dublin, in 2020 hows that investment in different funding streams can produce very different outputs and outcomes. For example, while funding for applied research – often in conjunction with industry – was successful in generating licences and patents, investments in investigator-led research were more likely to translated into high-value spin-out companies at a far greater rate than any other type of research funding. 

Scotland’s approach to driving innovation has to be place-based, building on the unique strengths and assets of different regions, and co-developed by local government, businesses, universities, and communities. In seeking to develop world-leading regional clusters, it is our collective duty to ensure that the benefits of innovation are also inclusive.  We must support the development of resilient industries and supply chains and, in particular, of our SMEs that are rooted in communities and provide secure, fulfilling employment. 

This means that, alongside good job creation, we must ensure the whole-system is geared up to maximise our impact and acts as a catalyst for sustainable change. The new Glasgow innovation accelerator recently announced by the UK Government will provide a unique opportunity for local, Scottish and UK Government to work together with university and industry partners to deliver for the city.

Finally, a crucial part of the Innovation Strategy will be the development of an evidence base to inform understanding of what works well and why, both within Scotland and in other high-productivity areas internationally. We must be clear on the root causes of underperformance and understand the mechanisms that will drive success – including funding for research, quality infrastructure, investing in skills development, enabling technological diffusion and boosting absorptive capacity of firms, and fostering successful partnerships between industry, the third sector, the education sector, civic society, and government.     

At the University of Glasgow, we are already committed to deliver on the collective economic ambitions and be a major contributor to the region’s prosperity and wellbeing through the development of new disruptive spin-outs, sectors, clusters, and industries. 

The primary ways in which we will seek to do this are: improving our portfolio of new ideas generated by academics and students that can be formed into economic and social enterprises, building stronger relationships with industry and public sectors, encouraging academic participation in innovation which builds on our research strengths and demonstrates potential for expansion at scale in the Glasgow City Region.  Furthermore, we will develop our aspirations for the Glasgow Riverside Innovation District (GRID) through co-creation of a new strategy with our key stakeholders.  GRID is already home to a thriving life sciences cluster, and the University, with partners and particularly with local communities, is working to consider the additional opportunities the partnership could bring.  

But such opportunities exist right across the country, and the Innovation Strategy offers us a potentially generation-defining chance to take them and create a new industrial legacy for Scotland. The opportunity is now before us, and if we work together in that shared national mission to position Scotland as a world-leading innovative nation, we will all reap the rewards. 

This article was first published in The Times on Friday 22 April 2022.

First published: 22 April 2022

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