A Trading Nation: analytical methodology note

3. Data and sector definitions

Introduction

35. The Export Growth Plan is based on a data-driven methodology, which considers Scotland’s current and past export performance, as well as Scotland’s potential opportunities for increasing exports. Underpinning this analysis are two analytical tools: Scotland’s Export Performance Monitor (described below) and the Export Value Gap Model (which is described in Section 4.1).

Scotland’s Export Performance Monitor

36. Scotland’s Export Performance Monitor has been produced to help understand Scotland’s current export trends, including top exporting sectors and markets.

37. It is based on the existing export data from the Export Statistics Scotland^[12] publication but presented with the aim to be more accessible and user friendly. It also uses new sector definitions and more detailed sub-sector breakdowns to help users to understand current and past export performance in Scotland. As well as detailed information on international and rest of the UK exports for each sector and sub-sector, this tool contains data on number of businesses, size of businesses, turnover and employment.

Data and sources

38. The Export Performance Monitor uses official Scottish Government export data which is collected annually to produce the Export Statistics Scotland (ESS) publication. The data is presented from 2002, which is when this data was first collected, to 2017 (latest data available) and covers both Scotland’s international exports and its exports to the rest of the UK.

39. One of the main sources of this data is the Global Connections Survey (GCS), which is sent to around 6,000 Scottish businesses each year and asks about exporting activity. Further to the GCS, relevant estimates for businesses in Scotland are also sourced from official and administrative sources produced by the Office for National Statistics (ONS) and other parts of the Scottish Government, including the ONS Monthly Business Survey and the ONS International Trade in Services Survey. Further information on various data sources used to produce the export data can be found in the latest ESS publication.

40. The tool also provides data on export destination countries for each sector and sub-sector. However the current ESS methodology means that destination country data should be treated as indicative only, particularly for the smaller sectors and sub-sectors.

Sectors and sub-sectors

41. The sector and sub-sector definitions used in this analysis are based on the Standard Industrial Classification (SIC)^[13] of the reporting company, which is based on the main activity of the company exporting. These definitions were developed in collaboration with our partner organisations, Scottish Enterprise and Scottish Development International to try and give a more detailed analysis than is currently provided from the sectors used in the published ESS data. They have also been designed in a way to avoid any duplication in the data. For example, the sub-sector, Pharmaceuticals is treated as part of the Life Sciences sector only and is not part of, for example, the Chemical Sciences sector. This means, when looking at the performance of a particular sector (i.e. Energy) you may have to consider more than one sector (such as Energy and Chemical Sciences) to be able to assess the full picture. Note, to provide additional context, each sector and sub-sector name is followed by ‘G’, to denote goods, or ‘S’ to denote services and this is based on the main activity for that particular sector

42. The ESS data excludes exports of oil and gas extracted from the UK Continental Shelf. However exports of services provided by the onshore Scottish economy to the Scottish offshore oil and gas sector are included and cross over a number of key sectors, including Engineering and Energy (Oil and Gas Support). For some sectors, current export data may not capture all export activity and work will continue to improve this data going forward, working with the relevant industry bodies and stakeholder organisations.

Growth rates and inflation

43. The analysis includes growth rates for each sector and sub-sector. These have been calculated over the shorter (2012 to 2017), medium (2007 and 2017) and longer term (2002 to 2017) periods. These rates are also compared with inflation for each sector and sub-sector. This is to help assess whether export growth has outperformed what we might have expected if the nominal value had increased in line with inflation, and to highlight the sectors and sub-sectors that have demonstrated strong performance. The inflation rate used is the Consumer Price Inflation index taken from the ONS website^[14].

Business statistics

44. A number of key business statistics are also included, such as business counts, number of employees and turnover, and for consistency, have been calculated using the same sector and sub-sector definitions as the export statistics. This means they may not match other published data.

45. These business statistics are sourced from the Inter-Departmental Business Register (IDBR). The IDBR, maintained by the ONS, is a database of all enterprises registered for VAT and/or PAYE, covering 99% of economic activity in the UK. Those excluded are small businesses with no employees and an annual turnover below the VAT threshold (£83,000 as at March 2017). Although the IDBR is not usually the preferred source for sectoral employment or turnover, IDBR employment and turnover data has been used here for consistency with the IDBR business counts and to provide a breakdown by business size. Note that business size here has been defined according to the number of employees that the business employs in Scotland (rather than UK-wide). Further information on business statistics, including methodology, can be found on the Scottish Government website^[15].

Other data sources: UK-level data

46. In addition to using data collected for Export Statistics Scotland, the analysis draws on HMRC Regional Trade Statistics (HMRC RTS)^[16]. HMRC RTS use customs data to apportion goods trade to different parts of the UK, including Scotland. This is based on the location of the trading company with employment shares used if the company has multiple sites in different parts of the UK. However this methodology means that some Scottish exports may be not be counted in the Scotland figures. For example, only 75% of the value of Scotch Whisky exports are included in the Scottish RTS data, while the other 25% is allocated to other parts of the UK.

47. These data are used in the Export Growth Plan to compare Scotland’s exports to international data on other countries imports and exports. It should be noted that the HMRC RTS data are collected on a different basis from the Export Statistics Scotland data, so the two do not always match. Analysis on the Food and Drink sector is also carried out using HMRC RTS data rather than Export Statistics Scotland data. This is to ensure consistency with existing published analysis for this sector.

48. The key benefit of the HMRC RTS data is that it is collected and categorised in a consistent way to that of other countries. In particular, it is classified according to the Standard International Trade Classification (SITC). It is this attribute that makes it possible to use this data to compare Scotland’s performance in markets around the world to that of competitors. However, as in the paragraph above, using the HMRC RTS data for Scotland’s goods exports does come with some caveats as the methodology means that not all Scottish exports will be included in the data for Scotland.

Other data sources: international data sources

49. Data on other countries imports and exports is extracted from UN COMTRADE. UN COMTRADE is a depository of trade data managed by the United Nations Statistics Division. It takes data self-reported by over 170 countries and processes it to make it as consistent as possible. It is available to download classified using the Standard International Trade Classification (SITC), making it consistent with the HMRC RTS data.