Global Scotland: trade and investment strategy 2016-2021

Chapter 2: The Role of Trade and Investment in Delivering Scotland's Economic Strategy and Sustainable Development Goals

Since 2007, the Scottish Government’s central purpose has been to create a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth.

Scotland’s Economic Strategy ^[9] (March 2015) strengthened our approach to delivering this by focusing on the twin goals of increasing competitiveness and tackling inequality. This is rooted in growing international evidence that promoting competitiveness and addressing inequality are reinforcing, not competing, objectives and that creating a fairer society is vital to creating the conditions to deliver sustainable economic growth over the long term.

As illustrated below, our focus on increasing competitiveness and tackling inequality is underpinned by a commitment to four priority areas for action:

• Investing in people, infrastructure and assets;
• Fostering a culture of innovation;
• Promoting inclusive growth and creating opportunity through a fair and inclusive jobs market and regional cohesion; and
• Creating a country with an international outlook and focus, open to trade, migration and new ideas.

Figure 2.1: Scotland's Economic Framework

As detailed in the Economic Evidence Discussion Paper published to inform this Strategy ^[10] , these priority areas support – and are supported by – international trade and investment.

• Investing in people, infrastructure and assets provides businesses with the skills and infrastructure they need to compete internationally and helps attract businesses and investors to Scotland. For example, our investment in digital connectivity and support to businesses to help them get online opens up new markets and horizons. In turn, as Scottish businesses internationalise and as overseas businesses invest in Scotland this brings new skills and knowledge to the Scottish economy. Furthermore, international investment can support the development of Scotland’s infrastructure and assets.
• Innovation increases international competitiveness. It helps businesses develop products and services for international markets; and our strengths in innovation, research and development are increasingly important to attracting investment to Scotland. Thus, our innovation support for business and our investment in university research and Innovation Centres supports trade and investment. In turn, inward investment transfers skills, technology and innovation to Scotland and there is evidence from the OECD, the UK and Scottish studies that as firms internationalise they become more productive and competitive. Exporting is also linked to higher levels of innovation for small and medium enterprises.
• Inclusive growth is supported by the positive impacts of international trade and investment on national income, productivity and employment and the opportunities it presents for all areas of Scotland. Furthermore, strengthening Scotland’s net (exports less imports) trade position will help move the economy to a more balanced and resilient growth path which is better placed to withstand economic shocks. At the same time, an inclusive economy in which everyone can achieve their economic potential can help businesses achieve their international ambitions and form an important part of Scotland’s distinct investment offer. The values-based partnership between business and Government, which is at the heart of the Scottish Business Pledge ^[11] , captures these connections.
• International trade and investment is absolutely central to our wider internationalisation agenda. It drives improvements in competitiveness and productivity, opens Scotland to new and different ideas and cultures and creates economic and other opportunities for individuals, businesses, universities and Scotland as a whole.

Given the above, this Strategy and the actions to deliver it form a central element of Scotland’s Economic Strategy.

UN Sustainable Development Goals

The United Nations’ ( UN) 2030 Agenda for Sustainable Development ^[12] and the 17 Sustainable Development Goals ( SDGs) ^[13] and associated targets which underpin it set out an integrated approach to making global progress across the economic, social and environmental dimensions of sustainable development.

The Scottish Government is fully committed to delivering that agenda in Scotland and internationally - to tackling poverty and inequality in Scotland and to helping developing countries grow in a fair and sustainable manner.

Like the UN, the Scottish Government believes that trade and investment can play a vital and positive role across all 17 SDGs. Indeed, the UN’s declaration on the SDGs states that:

‘International trade is an engine for inclusive economic growth and poverty reduction, and contributes to the promotion of sustainable development’.

Furthermore, action to ensure an international, rules based system for trade and to help developing and least developed countries benefit from that system forms a key element of SDG 17 ^[14] .

Our aim therefore is not just to improve Scotland’s trade and investment performance but also to contribute to inclusive and sustainable development elsewhere, especially in developing countries. In particular, and in line with Scotland’s International Framework, Scotland can be a ‘Good global citizen’ - using trade to help address global challenges such as poverty and climate change, promote human rights and share knowledge, skills and technical expertise for global good. We will also take action to internationalise Scotland’s world leading approach to social enterprise – helping Scottish social enterprises expand internationally and helping others realise the benefits of the social enterprise model. As part of a broader approach to ‘Policy Coherence for Development’, specific initial steps to take this new trade agenda forward are set out in Chapter 6.