Together we can, together we will: consultation

Scotland's Rural Economy Defined and Understood

Let's begin with the most fundamental question – what is the rural economy?

In February 2018 the Scottish Government published a paper ' Understanding the Scottish Rural Economy', providing valuable information on what is produced, built and delivered in rural Scotland.

The paper presents a new Scottish Government RESAS classification clustering local authorities according to their level of rurality ^[2] .

The RESAS paper acknowledges that despite this updated approach to measuring rurality, there is no singular definition of the rural economy and that there are limitations to how rural economics are measured.

The NCRA takes the view that we must challenge current thinking on how economic growth is measured in rural contexts. Historical approaches to measuring impact assess economic contribution as a resulting Gross Value Added ( GVA) ^[3] . Currently this sits at £34.6 billion for rural Scotland ^[4] .

We believe this value ignores the contribution of a number of crucial factors –

• The large number of non- VAT registered businesses who deliver significant economic and social benefit: Micro businesses seem to be particularly common in remote (91%) and accessible rural areas (89%) compared to large urban areas (83%). With up to 50% of private sector enterprises in Scotland being unregistered, the real importance of micro businesses can only be estimated.
• The value of environmental impact - so called 'natural capital accounting' which measures the flow of natural resource and services.
• Cultivating the social impact of economic activity and its importance in ensuring sustainable service provision and infrastructure.

The NCRA has used the RESAS definition to provide a base understanding of current research on the rural economy, but has also opted to shape our thinking based on the view that:

The rural economy of Scotland is multifaceted, diverse, and is valued upon the characteristics of its people and heritage: creativity, collaboration, innovation and resilience.

It is of fundamental importance that we celebrate these attributes and apportion value to their contribution in determining Scotland's economic future moving forward. Without a clear understanding of our economic environment, and its challenges, it is impossible to design responsive support mechanisms and policy frameworks to support a thriving and vibrant rural economy.