Regional economic policy review: paper 3 - international perspective

5. Conclusions

5.1 The valuable comparative analysis of international approaches to addressing regional disparities outlined in this paper has led to the conclusions below. Before noting them, it is worth highlighting that the Scottish Government’s stronger emphasis on regional working is in keeping with the other aspirational countries with ambitions to build a Wellbeing Economy. This helps to reassure this is justified approach with clear benefits that build on recognising that different regions have different economic needs and strengths. This ought to give Scottish Government greater confidence in pushing this policy agenda further, supporting and working with regional partners to realise more equitable regional economic growth.

Shared Challenges Related to Rurality

5.2 There are key challenges experienced by all/some of the countries examined, whereby the demographic issues related to declining and aging population, labour and skills shortages, plus transport and digital infrastructure issues are viewed as core barriers to economic growth. Whilst Scottish Government have key rural and population policies aimed at treating exactly these issues, and as noted in prior conclusions, there are undoubtedly specific regional treatments of these. REPAG suggest that further exploration of whether and how the approaches taken by Finland, Norway and Sweden, who emphasise rural regions in strategic focus, could also be applied to Scottish regions such as Highlands and Islands and the South of Scotland.

Regional Productivity

5.3 This results in productivity gaps between rural and urban areas, with Scotland being more akin to Ireland, Canada and New Zealand in terms of having certain regions (largely those in the Central Belt) driving productivity more than others. A nuanced approach to boosting productivity, where regions identify and focus on particular sectoral strengths and have effective support from Scottish Government (where the levers exist) to reduce barriers, may allow productivity rates in more rural areas to begin to close the gap. Piloting Intelligence Hubs in these rural areas as a priority would support this work.

Business Development

5.4 Noting the similarity between Denmark and Scotland in terms of the priority areas for strategic business development, targeted to unlock the specific growth potential of individual regions, REPAG believe there would be merit in Scottish Government and the Enterprise Agencies examining further what lessons could be learned, and knowledge shared, such that we are able to strengthen our strategic approach to supporting businesses on a regional basis.

Towns and Cities: Sharing the Benefits

5.5 REPAG note the efforts made in Norway (specifically around towns) and Finland (in terms of smaller cities) to address territorial inequality and strengthen their role as part of the wider urban policy and regional economic development, there are links to Scottish Governments Towns and Cities Policies. Denmark have taken this a step further and have sought to boost productivity and encourage growth throughout the country by disbursing Government institutions beyond the big cities and into other areas. This is something the Scottish Government may wish to consider doing more of.

Grand Challenges & Megatrends

5.6 This review has highlighted certain national policy areas that have a clear regional application or delivery dimension. Canada have also recognised the spatial implications of global megatrends such as climate change, digitalisation and technological shifts. Policy Horizons Canada’s work in scanning the policy horizons looking to identify policy opportunities within these trends, and analyses the implications of such changes looking at how this might impact regions. REPAG would suggest that the Regional Intelligence Hubs suggested in Paper Two could look to replicate this horizon scanning and foresight analyses, working alongside the SG’s Office of the Chief Economic Adviser (OCEA) to assess how national challenges might play out in each region. This could link in particular to net zero and Just Transition and sustainable development as a priority.

Digitalisation

5.7 In Paper One REPAG highlighted the future potential to take a regional approach to digital economy policy and delivery in Scotland, and we see how Sweden, Finland and Iceland have fostered territorial cohesion and inclusion through emphasising digitalisation in regional policy, making links to rurality and digital equality. Noting the link between net zero and digitisation, this marks out clear supporting justification for the proposal scoped out in Paper One.

Skills

5.8 Connecting once more to the conclusions drawn from Paper One, this time on the need to align regional skills and encourage REPs to take forward complementary Regional Skills Strategies, we note the work in Sweden, where skills divergence between regions, and the need for a regional skills supply, is one of five long-term societal challenges at the heart of the new Strategy for Sustainable Regional Development. This demonstrates that the themes and conclusions being drawn from this review are consistent with other countries pursuing a Wellbeing Economy.

Governance

5.9 Throughout this paper in the review we see governance structures largely created to support planning by local authorities. REPAG identified key recent trends in governance that underpins regional policies, which involved strengthening horizontal and vertical policy coordination; adaptation of governance structures to the demands of addressing regional challenges in a more targeted way, including partnership and agreement based policy delivery; decentralisation, and a stronger emphasis on the quality and capacity of structures and capacity building.

5.10 These are all entirely consistent with the findings from Papers One and Two, and ought to give confidence that in accepting the conclusions and recommendations from this review, Scottish Ministers are acting to ensure Scotland keeps pace with other Wellbeing Economies. Indeed, by taking the recommendations forward and learning from the best practice across a range of other nations, Scotland could lead the way in regional economic development.

Closer Policy and Portfolio Coordination

5.11 As has been made clear in previous papers within this review, more deeply coordinated efforts to align policies on a regional place-based basis is essential to realising the full benefits highlighted here. REPAG note that other countries recognise this necessary facet of successful policy design and implementation, with Canada collaborating between federal and provincial governments to embed the regional lens in horizontal policies. Norway and Iceland have also made efforts to coordinate Ministerial portfolios to better track and understand activity, and proactively find ways to increase the impact of policy objectives within regions. Decision making with Scottish Government can only benefit from this kind of coordination, ensuring the refreshed culture of delivery highlighted as necessary within NSET flows right through all parts of Government.

Capacity Building

5.12 Finally, institutional quality and capacity are priorities across the majority of countries REPAG have assessed as part of this review. Though this may take slightly different forms, the overarching principle is the same: if regional activity and policy delivery are drivers of national aims relating to all aspects of a Wellbeing Economy, this cannot be achieved without Central Government support. Building resource capacity is critical, particularly in terms of enhancing analytical capacity. The would lead to deeper knowledge, sound analysis, would ease monitoring and evaluation, and add to research on regional development challenges in Scotland. This would all be supported by novel, high quality data and indicators. It is evident to REPAG that this international study supports previous conclusions that the Scottish Government explore how to build capacity within REPs, with the Regional Intelligence Hubs being a primary option to appraise.