Economics of Independence

An independent Scotland can boost business innovation

Written by Michael Gray

New research by charity Nesta explores how small countries thrive in an international economic environment.  This evidence demonstrates that an independent Scotland can innovate and improve the economy.

In terms of innovation, Scotland already has world-leading strengths in research and development through its university system. However the creation of new products, services and businesses has been lower than in other countries. The economic powers of independence provide the control and choice to create policies to support innovation.

Nesta focused on successful models of innovation in Finland, Estonia, Israel, Singapore and the Basque Country. Each has focused and specialised within their economic development.

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Basque Country

The Basque Country, for instance, gained greater economic power in the 1979 Statue of Autonomy. From that period of crisis, the Basque Country is now 33% above Spain’s income per capita. One of the reasons for this has been a consistent focus on industrial competitiveness and research.

The Ikerbasque Foundation was set up to recruit international senior researchers and Innobasque was established to prioritise regional cooperation. This has allowed the Basque Country to promote exports and internationalisation of the region’s industries.

The Basque Country is also a model of best practice for cooperative business. Mondragon is a federation of cooperatives which focuses on worker participation, social responsibility and innovation. It has 269 companies across retail, knowledge, finance and industry. The corporation represents 3.6% of the Basque Country’s GDP. It is also a leader in research and development, with a University of Mondragon and €140 million of research investment.

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Estonia

After gaining independence in 1991, Estonia focused on new technological reform. Investment in technology has returned a high tech start-up rate, investment by established companies and infrastructure improvements.

Government leadership was important. In 2000 the Estonian Parliament declared basic internet access a human right and began a tech expansion project to take free wifi access to the nation. Today Estonia has over 2,440 free certify wifi access points for public use. ‘Coding’ is also now part of the school curriculum.

This has led to a number of key national innovations including the first e-voting election in 2007, the first network of electric car chargers, and the E-Estonia government operating system.

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Finland

Since 1994 Finland has enjoyed an economic turnaround. One of the reasons for this is Finland’s strength in innovation and production. The report recognises Finland’s success in electronics, innovation in public services and the position at the top of the OECD education league table.

Finland’s research has a commercial focus through Tekes and the Strategic Centres for Science, as explored previously on Business for Scotland.

Lessons for Scotland

Nesta concluded,

“The most important lesson from these case studies is that small countries can succeed economically through innovation. This may be obvious to some, but it bears repeating: going large is not the only viable option when it comes to national innovation policy.”

Their conclusions follow previous articles by Business for Scotland which highlight impressive levels of university research albeit low levels of business research investment. The challenge for Scotland is to pursue global opportunities and develop effective innovation institutions.

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About the author

Michael Gray

Michael is Head of Research with Business for Scotland.

A graduate from the University of Glasgow, he has carried out a series of interviews with academics, politicians and the public in Denmark, Iceland and Ireland. Michael's on twitter @GrayInGlasgow.

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