Why Scotland needs to be more innovative

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by Heather Jones

Chief Executive Officer

SCOTLAND has a rich heritage of innovation – it’s almost become clichéd to point to the long list of Scottish inventions still used today, whether it is the television, radio, or penicillin. That legacy continues, with science and tech-led sectors driving economic growth, ranging from aquaculture and biotechnology to software development and advanced manufacturing.

Yet, we cannot rely on past, or even current, successes to keep Scotland at the vanguard of progress – the whole point of innovation is about continuous improvement of methods, products, and ideas. So, how do we ensure our country remains one of the most innovative small economies in the world?

There are a few places we need to focus our efforts. One of the most important is that innovation spending in Scotland is predominantly concentrated on earlier "concept" stages of the development process, which also tend to be the riskiest parts.

Just as significant is the fact that less funding goes towards the conversion and commercialisation stages that follow. In other words, we are using a lot of resources to develop new concepts and ideas, but we are not doing enough to turn these into viable products and services that would deliver economic growth.

We have seen this mismatch play out in research and development (R&D) statistics over the last decade or so. The latest available data shows Scotland is in the top quartile among OECD countries and first among the UK’s 12 regions and nations for higher education R&D as a share of GDP. Yet, we are much weaker on business enterprise R&D, ranking eighth in the UK and in the third quartile of OECD countries.

Innovation support has to ensure that research can be taken right through from initial concept to commercialisation. As a starting point, companies devoting time and resource to R&D in Scotland need better access to investment and assistance with cashflow.

In addition, future innovation support should be focussed on sectors that are globally relevant and in which there is sufficient corporate "pull" to leverage R&D expertise in Scottish universities, as well as where the necessary mechanisms exist to turn research into reality.

This entails focusing resources on innovation-rich sectors where global demand is rising, where Scotland has existing and emerging competitive strength, where supply is not subsidy-dependent, and which link to Scottish and global decarbonisation objectives.

Policy and regulation also have an important role to play. It has been widely recognised that there is a clear need for government to provide the basic foundations for innovation to thrive – in particular digital infrastructure and a skilled population.

Innovation is largely seen as a key driver of economic growth, but it can also be a major contributor to Scotland’s environmental and social ambitions. With an uncertain geopolitical outlook, net zero carbon targets to reach, and an economy still emerging from the Covid-19 pandemic, it is more important than ever that we work together – led by government – to try to make Scotland as innovative as it can be.

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