Scotland: a trading nation

Education, Tourism and Creative Industries

Introduction

As well as making a direct contribution to Scotland’s export performance our education, tourism and creative industries also play a significant enabling role in other exporting sectors. 

These are also sectors which, by their nature, offer significant additional export and economic development opportunities through ‘technology push’ or ‘market pull’ factors that can be difficult to capture in the raw export statistics that have been used to support the identification of priorities in this plan. They do this by attracting customers, capital or skills to Scottish businesses, products and services across the wider economy.

The significant role that these sectors play in the wider economy is well recognised and they will continue to be supported alongside the priorities identified in this plan.

Education and skills 

The higher and further education sectors make a significant contribution to Scotland’s exports. Course fees received by Scottish institutions, together with the spend on living costs and in the general economy made by foreign students, are included as part of Scotland’s export statistics. Also included is the value of courses delivered by Scottish institutions on overseas campuses or on digital platforms internationally.

These revenues alone make higher and further education a significant export earning sector for 

Scotland. Estimates suggests that international students bring a net economic contribution of £1.94bn(1)

In addition our higher and further education sectors contribute indirectly to Scotland’s export performance in other ways, including: 

1. International students, who provide a significant contribution to the Scottish economy and students that stay on and work in Scotland contribute to the businesses that employ them, particularly where those businesses are trading, or want to trade, in the country the student originates from;
2. Supporting business exports through innovation and research & development partnerships;
3. Through international research collaboration, which helps create stronger links to other markets, opening doors as well as supporting Scotland’s research capability and capacity;
4. Through providing courses on exporting, helping to develop the exporting capabilities of Scottish businesses.
5. Through leveraging the extensive alumni network internationally as a source of business links to help Scottish exporters.

All of these areas bring value to the Scottish economy and the education sector is central to delivering increased exports.

Universities and Higher Education

Scotland’s universities and higher education (HE) sector incorporate 19 HE institutions, including 15 universities and four other institutions. Scotland has the highest concentration of universities in Europe and 11% of the UK’s universities (Universities Scotland 2016)(2) .Scotland has four universities in the top 200 in the world (Times Higher Education University World Ranking 2018/19)(3). 

Students

Scottish universities currently educate around 215,000 students. A 2016 Universities Scotland report highlights that over 22% of HE students in Scotland are overseas students(4). 

Research

Scotland’s university research base is among the best in the world, with three Scottish universities in the world top 200 for research (volume, income and reputation) and four for research influence (citations)(5). Collaboration is a defining feature of Scotland’s higher education both at home and internationally. For example, ‘research pools’ operate across institutions, sharing resources, facilities and expertise. 

Close partnerships between business and academia have helped new industry sectors to emerge and thrive in Scotland, including life sciences, renewable technologies, digital technologies and the creative industries. The World Economic Forum’s Global Competitiveness survey recently found that Scotland’s universities collaborated more extensively with business than many of their peers, including the USA, Netherlands, Germany, Japan and Denmark. The research hubs that cluster around Scotland’s universities attract inward investment from research-led global companies, including: GlaxoSmithKline; FMC and Toshiba Medical(6. The core grant for university research and innovation from the Scottish Government via the Scottish Funding Council for 2018-19 increased by 6.4% to £296mn to strengthen this status and encourage more partnerships with industry.

Scotland’s universities have been more effective at engaging with SMEs for innovative purposes than the rest of the UK. A 2016 Universities Scotland publication reported that 29% of all consultancy undertaken with SMEs in the UK is done by Scottish universities despite being only 11% of the UK’s universities(7).

Current Export Performance

• Scotland’s Export Performance Monitor indicates that international education exports grew from £170mn in 2002 to £775mn in 2017.  
• In that same time exports to the rest of the UK grew from £280mn to £515mn.
• In 2017, education exports counted for 2.4% of total international exports.

Current Export Markets 

China is currently the largest export market for Scottish HE exports. This is consistent with the feedback from stakeholders during the development of the plan who all identified China as the single largest market for HE exports, especially for attracting international students to Scotland. 

The remaining markets in the top five are: USA, Germany, Malaysia and Italy. 

Key market opportunities for transnational education (education delivered in a country other than the one in which the awarding institution is based) include China and Malaysia, as well as in the Middle East and India. In the Middle East, Dubai offers an opportunity to support education engagement around Expo 2020. 

The US market opportunity derives from using university assets in trade development and investment attraction. We will use alumni and thought leaders to add value to opportunity development in-market. The sub-market opportunities around data and fintech are particularly relevant in North America.

Key Growth Markets

China will continue to be a significant market for HE exports, particularly for attracting international students to Scotland. However, diversification across different markets would help de-risk an over-reliance on China. Efforts should be made to increase exports to markets where Scotland already has a strong presence such as Malaysia, India and North America (identified as a priority market by the Universities Scotland International Committee). 

Consultation identified opportunities in three key areas: 

• International student recruitment;  
• Research and business collaboration;
• Transnational education.

Beyond this, leveraging the existing alumni networks and increasing philanthropic donations to universities from organisations and alumni are other opportunities. The Enterprise and Skills Review also identified the need to do more to harness the benefits that can be obtained from the wealth of expertise and assets in Scotland within academia, research and alumni living abroad for the wider benefit of businesses in Scotland.

Consultation also identified that Scottish universities’ international offering is falling in comparison to universities in the rest of the UK. A recent report by the Migration Advisory Committee highlighted that Scotland attracts 5% of overseas students switching from a tier 4 student visas to tier 2 work visas, while London attracts around 47%(8). There may be an opportunity to increase the number of overseas ‘switchers’ choosing Scotland. 

Universities Scotland is developing a regional approach for the North American market. The priority city/region will be chosen based on its links with partners, universities and UK governance and infrastructure in the area. The region will be a focus for collaboration across business, education, research, innovation and alumni activities. Universities Scotland is keen to explore working with Scotland is Now to provide a distinctive focus on universities and business in a single city or city region. This may be an approach that has wider applicability for other sectors. 

Actions We Will Take

• Support Scottish universities and colleges to be the destination of choice for international students. This involves supporting education institutions in promoting their international offering under the ‘Scotland is Now’ banner as part of Brand Scotland. 
• Work with Talent Scotland and Universities Scotland to identify ways to increase the number of international students choosing Scotland as a destination for study in line with competitor countries and to ensure Scotland retains a proportionate share of international graduates.
• Support Scottish universities and colleges to access international opportunities and support our universities to build strategic research collaborations with markets that are investing heavily in research.
• Use the platform provided by Dubai Expo 2020 to showcase Scotland’s educational offering. 
• Use our higher education institutions to upskill our workforce, including leadership teams within businesses, to enable them to take up export opportunities.
• Support businesses to access professional training on exporting.
• Work with the UK government’s Department for International Trade and Department for Education in all relevant areas (including those mentioned above) to ensure that Scotland benefits from at least its proportionate share of growth in education exports, in light of the UK government’s International Education Strategy, 
• Make best use of Trade Envoys, particularly Wendy Alexander, to pursue international opportunities. 
• Alongside the refresh of the GlobalScot network, seek to leverage Scotland’s vast alumni network for the wider benefit of Scotland’s economy. 
• Identify what actions can be taken to increase the number of overseas students choosing Scotland as a destination when switching from tier 4 to tier 2 visa. 
• Continue to support Innovation Centres where there is an opportunity to internationalise.

Tourism

Tourism is an important export for Scotland. Using traditional figures on exports it is estimated that tourism exports are valued at £915mn (around 1.1% of all exports).

However this does not take into account the full impact of the sector. The tourism industry is a key part of the Scottish economy and vital to the economic performance of towns, cities and regions across Scotland. 

The industry accounts for around one in every twelve jobs in Scotland and spending by day and overnight visitors contributes around £8 billion to Scotland’s GDP, around 6% of the total. It plays an important role in the economies of Scotland’s major cities, while also making a substantial contribution to sustaining employment and economic activity on Scotland’s islands and in its rural communities. 

The Scottish Government’s growth sector briefing(9) for April 2019 indicates that 206,000 people were employed in the sustainable tourism sector in 2017. 

The ONS publication ‘Travel Trends: 2017(10) also reports that:

• In 2017, almost £2.3bn was spent by overseas visitors in Scotland; and 
• Over 3.2m overseas visitors came to Scotland in 2017.

Tourism also supports Scotland’s exports by giving tourists exposure to Scottish products which they may look to access back in their home countries – opening up potential new markets.

Current Export Performance

Tourism accounts for an important portion of Scotland’s exports, particularly with regard to services. Total exports from the sustainable tourism growth sector stood at £915mn in 2017, accounting for 2.3% of Scotland’s total services exports, and for 1.1% of Scotland’s total exports overall. Exports to the rest of the UK stood at £580mn in 2017 and accounted for 63.4% of total sustainable tourism exports. Exports to the rest of the world stood at £335 million and accounted for 36.6% of total sustainable tourism exports(11).

Support For The Sector

VisitScotlandis Scotland’s national tourist organisation and is the public sector body which looks to drive tourism in Scotland. VisitScotland uses a wide variety of campaigns and strategies to increase Scotland’s presence on the world stage and to encourage people from other countries to visit Scotland and to build links with Scotland. This includes work on business tourism, attracting businesses to hold conferences and events in Scotland, which can lead to links with Scottish businesses, potentially leading to future export opportunities.

VisitScotland also provides a wide range of support to tourism businesses through their website.

The Scottish Tourism Alliance is the representative body of the Scottish tourism industry. The organisation comprises over 250 trade associations, businesses, destination groups and other organisations with an interest in tourism.

The Scottish Tourism Alliance has a clear national tourism strategy which looks to increase the value of tourism in Scotland and to help increase the number of visitors to Scotland. The organisation also provides advice to tourism businesses on how to grow their business. 

Actions We Will Take

• Continue to work closely with VisitScotland and the Scottish Tourism Alliance to ensure that we are maximising the export potential of tourism.
• Ensure that the business pillar of Scotland is Now as part of Brand Scotland recognises the key role that tourism plays in driving further exports.

Creative industries

The creative industries have their origin in individual creativity, imagination and curiosity. Trading in products and services that have their roots in intangible cultural, expressive and emotional values, they create new insights, delights, products and experiences. 

The Scottish Government defines the sector as made up of 16 distinct industries: advertising; architecture; crafts and antiques, computer games; cultural education; design; fashion and textiles; film and video; libraries and archives; music; performing arts; photography; TV and radio; software and electronic publishing; writing and publishing and visual arts. 

The creative industries make an important contribution economically, socially and culturally to Scotland and internationally. It is one of the fastest growing sectors in Scotland, with its contribution to the economy (GVA) having grown 44% between 2008 and 2016. They are characterised by a large number of micro and SME businesses: in 2017 there were over 15,000 registered enterprises employing over 77,000 people (excluding freelancers and students studying creative courses)(12).

Current Export Performance

In 2017, the creative industries had international exports of almost£1.4bnwhich contributed to 4.2% of the international exports from the key growth sectors. In that year they also exported £2.3bn to the rest of the UK(13).

Most creative businesses have an intrinsically international outlook and flourish as a result of international collaborations and connections. Trading in intangibles through for example music, film, design, publishing or computer games they can reach international audiences and customers more easily than many other sectors. This also means that their contribution is not readily or easily captured when looking at traditional export data. Cross-border collaboration between creative professionals is fundamental to the free flow of creative ideas and expression and, ultimately, the continued development of the sector.

Creative businesses also play a key role in building brands and promoting Scotland on the world stage. They bring benefit to the wider economy by increasing business competitiveness and international distinctiveness. 

Key Growth Markets

Exporting in the creative industries is about building relationships. Gaining access to international networks and building partnerships is crucial to meet people in-market, make connections within supply chains and work with other companies internationally. Networks within Scotland and the UK are also important, where smaller firms can work with larger firms bidding for international projects. 

Our extensive network of overseas offices, Trade Envoys and GlobalScots can play a valuable role in facilitating introductions and providing informal advice on how to approach the market. Creative businesses looking to export should make good use of them.

Actions We Will Take

• Work with the Creative Industries Advisory Group to support the wider impact of the creative industries on exports. 
• Make use of our networks of GlobalScots and Trade Envoys to support and promote the creative industries as well as wider international networks, including diaspora and alumni.
• Include examples from the creative industries in the development of the business pillar of Scotland is Now as part of wider Brand Scotland ambitions. 

Other initiatives promoting international networks and collaboration from our public sector partners include:

• Showcase Scotland, a standing item for the last weekend of Celtic Connections, when musical directors and programmers of leading festivals and venues from around the world travel to Glasgow to attend performances by Scottish songwriters, bands and musicians. 
• Highland and Island Enterprise’s Xponorth, a creative industries festival, which brings the key influencers and buyers in the creative industries from major multinationals to independents. 
• The Production Growth Fund of Screen Scotland helps to grow Scotland’s screen production sector, creates employment for Scottish crews, encourages the use of production facilities, provides significant opportunities for the professional development of producers in Scotland and delivers a direct and significant economic benefit to Scotland.

References:

(1) https://www.gov.scot/publications/impact-international-students-scotland-scottish-government-response-migration-advisorycommittees/pages/4/