Economic Development in Scotland

Alers, Tim

Economic Development in Scotland

Changes and Prospects for the Economic Core Region Edinburgh

von Tim Alers (Autor:in)

Geowissenschaften / Geographie - Wirtschaftsgeographie

Zusammenfassung

Inhaltsangabe:Introduction:
This thesis tries to examine the structures, activities, changes and spatial impacts of economic development in Scotland. Looking at the Scottish economy it has to be considered that Scotland is both an integrated part of the UK and the UK economy and a peripheral region within the UK.
Therefore Scotland does not have an economy of its own, but the distinctiveness of the region in terms of location, history and recent political devel-opments justifies a closer examination of the matter. Scotland is in many aspects a very heterogeneous region. This is in particular true for the economic structure and a focus on one region cannot be representative. Edinburgh is an exceptionally prosperous region, not only in Scottish terms.
However this prosperity and activity in economic development makes Edinburgh an interesting subject for examination. Thus the focus of this thesis lies on the developments in Edinburgh. Economic development is certainly influenced by a vast number of factors and it is impossible to take all of them into account. Within this thesis the emphasis lies on governmental influence on the developments. However European development measures are not considered. Accordingly the thesis aims to look at the ways the promotion of economic development is carried out in Scotland and tries to assess the measures on the background of the distinctiveness of Scotland and Edinburgh.
Thus in the first chapter the thesis takes a look at Scotland as a whole, examining the physical environment, the administrative framework and its re-cent changes. Furthermore it looks at the economic legacy of the heavy industries and the recent developments in the Scottish economy. Subsequently the history and institutions of the promotion of economic development in Britain and Scotland are presented. The last part of the first chapter deals with the planning framework in Scotland. The second chapter portraits Edinburgh's economic structure. The key industries are presented briefly as are the institutions of economic development.
Afterwards parts of the Edinburgh development plan are examined. The third chapter focuses on the Waterfront project in Edinburgh. The background of waterfront revitalisation is presented. The project and its participants are then examined in some detail. Finally a conclusion is drawn on the developments in Edinburgh.

Inhaltsverzeichnis:Table of Contents:
Abbreviations
List of Figures
List of […]

Leseprobe

Inhaltsverzeichnis

ID 8735

Alers, Tim: Economic Development in Scotland -

Changes and Prospects for the Economic Core Region Edinburgh

Hamburg: Diplomica GmbH, 2005

Zugl.: Rheinisch-Westfälische Technische Hochschule Aachen (RWTH),

Magisterarbeit, 2004

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E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

Content

Abbreviations...V

List of Figures ...VI

List of Tables ... VII

Introduction... 1

1 SCOTLAND ...3

1.1

HYSICAL

NVIRONMENT

...3

1.2

OPULATION AND ADMINISTRATIVE STRUCTURE

...7

1.3

COTTISH ECONOMY

...10

1.3.1

Early industries ... 10

1.3.2

Silicon Glen ... 12

1.3.3

North Sea Oil ... 13

1.4

CONOMIC

EVELOPMENT

...15

1.4.1

History of economic policy ... 17

1 . 4 . 1 . 1

R e g i o n a l S e l e c t i v e A s s i s t a n c e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 9

1 . 4 . 1 . 2

D e v e l o p m e n t A g e n c i e s t h e S c o t t i s h D e v e l o p m e n t A g e n c y

a n d t h e S c o t t i s h E n t e r p r i s e N e t w o r k s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0

1 . 4 . 1 . 3

I n s t i t u t i o n a l P r o b l e m s t h e Q u a n g o d i s p u t e . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

1 . 4 . 1 . 4

T h e S c o t t i s h d e v e l o p m e n t a g e n c i e s t o d a y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4

1.5

COTTISH

LANNING

YSTEM

...26

1.5.1

Structure Plans... 28

1.5.2

Local Plans... 30

1.5.3

Conclusion... 31

2 EDINBURGH AND LOTHIAN ...33

2.1

OTHIANS

...33

2.2

DINBURGH

...37

2.2.1

Introduction ... 37

2.2.2

Population ... 40

2.2.3

Sectoral structure and changes ... 44

2 . 2 . 3 . 1

F i n a n c e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 6

2 . 2 . 3 . 2

R e t a i l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8

2 . 2 . 3 . 3

T o u r i s m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 9

2 . 2 . 3 . 4

C r e a t i v e I n d u s t r i e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0

2 . 2 . 3 . 5

F u r t h e r a n d H i g h e r E d u c a t i o n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1

2 . 2 . 3 . 6

B i o t e c h n o l o g y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2

2.2.4

Perroux and Peripherality ... 54

2.2.5

Development constraints ... 56

2.2.6

LEC Edinburgh and Lothian ... 59

2.2.7

The City of Edinburgh Council... 61

2.2.8

The Plans ... 64

2 . 2 . 8 . 1

E d i n b u r g h a n d L o t h i a n s S t r u c t u r e P l a n 2 0 1 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4

2 . 2 . 8 . 2

W e s t E d i n b u r g h L o c a l P l a n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7

3 WATERFRONT REVITALISATION IN EDINBURGH THE GRANTON

WATERFRONT PROJECT ... 69

3.1

NTRODUCTION

...69

3.1.1

Restructuring the Waterfront... 71

3.1.2

The history of Granton... 74

3.2

ROJECT

...80

3.2.1

Structure and plans ... 81

III

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

3.2.2

The Landowners and the individual plans... 84

3.2.3

Transport... 92

3.2.4

Organisation and Progress... 94

3.3

ONCLUSION

...96

4 FINAL STATEMENT ...103

References ... 108

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

Abbreviations

AEF

Aggregate External Finance

CDA Central Development Area

CEC

City of Edinburgh Council

EICC

Edinburgh International Conference Centre

EIP

Examination in Public

Enterprise Zone

FDI

Foreign Direct Investment

Great Britain

GDP Gross

Domestic Product

GEAR

Glasgow Eastern Area Renewal

HBOS Halifax/Bank of Scotland

HIDB

Highland and Island Development Board

HPI

Highland Perthshire Initiative

IDC

Industrial Development Certificate

IPR

Intellectual Property Rights

LEC

Local

Enterprise Company

NEAR

North Edinburgh Area Renewal

NHS

National Health Service

NPPG

National Planning Policy Guidelines

ONS

Office of National Statistics

PAN Planning Advice Note

PLI

Public Local Inquiry

R&D Research

and Development

RDA Regional Development Agency

RSA

Regional Selective Assistance

SDA

Scottish Development Agency

SEEL

Scottish Enterprise Edinburgh and Lothian

SIMD

Scottish Index of Multiple Deprivation

SME

Small and medium sized enterprises

SPP

Scottish Planning Policies

United Kingdom

Virtual Reality

WEL

Waterfront Edinburgh Ltd

WTC World Trade Centre

WWI/WWII

World War I/II

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

List of Figures

Figure 1:

Scotland

Figure 2:

Unitary council areas in Scotland

Figure 3:

SE and HIE Areas 21

Figure 4:

The Lothians

Figure 5:

Industrial structure of Enterprises in 2000

Figure 6:

Mix of Employee Jobs in Lothian

Figure 7:

GDP in Lothian (1998)

Figure 8:

Unemployment Rate 1993 2003

Figure 9:

Edinburgh Population (1990 2002)

Figure 10:

Age-structure in Great Britain

and Edinburgh (2002)

Figure 11:

Population change and net migration

Figure 12:

Jobmix in Edinburgh 2002

Figure 13:

Industrymix in Edinburgh 46

Figure 14:

Tourism in Edinburgh and Scotland

Figure 15:

Typology of regions

Figure 16:

Average House Prices 1993 1998

Figure 17:

Indicators of social and economic

disadvantages in Edinburgh (wards)

Figure 18:

SEEL Expenditure Breakdown 2002/3

Figure 19:

BT building and JP Morgan building

in Edinburgh Park

Figure 20:

Ocean Terminal and Royal Yacht Britannia

Figure 21:

Untitled (model of port-city-interface)

Figure 22:

The Granton area today

Figure 23:

Granton harbour around 1927

Figure 24:

Aerial view of the site looking west

with the Forth Rail Bridge in the background

Figure 25:

Structure (of the Waterfront Developments)

Figure 26:

The Llewelyn-Davis Masterplan (2000)

Figure 27:

The Quarters

Figure 28:

Scottish Gas Call Centre (SecondSite)

Figure 29:

Forth Properties site

Figure 30:

VR model by Cooper Cromer (Forth Property)

Figure 31:

WEL Masterplan

Figure 32:

Predominant Land Use Mix in

Granton as planned

Figure 33:

Central Development Area

Figure 34:

Traffic connection of Granton Waterfront

Figure 35:

Organisational structure of the development

Figure 36:

The Spine on the CDA

Figure 37:

The Saltire Square after completion

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

List of Tables

Table 1:

Population and population

change by council area

Table 2:

The structure of the Scottish economy

by distribution of employment sector

Table 3:

Differences between national-level

regional policies and RDAs

Table 4:

Components of Change

In Edinburgh (1991 - 2000)

Table 5:

Reasons for moving within

Great Britain (1991 2000)

Table 6:

Reasons for moving by distance moved;

Great Britain (1991 to 2000)

Table 7:

Rates of job-related migration between regions

by sex, age, skill level and occupation;

Great Britain (1991 to 2000)

Table 8:

Key Employers in Edinburgh's Financial Sector

Table 9:

Edinburgh and Lothians biotech cluster 1999

Table 10:

Companies with their head offices in Edinburgh

Table 11:

Strategic development projects in Edinburgh

VII

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

Introduction

This thesis tries to examine the structures, activities, changes and spatial im-

pacts of economic development in Scotland. Looking at the Scottish

economy it has to be considered that Scotland is both an integrated part

of the UK and the UK economy and a peripheral region within the UK.

Therefore Scotland does not have an economy of its own, but the distinct-

iveness of the region in terms of location, history and recent political devel-

opments justifies a closer examination of the matter. Scotland is in many

aspects a very heterogeneous region. This is in particular true for the eco-

nomic structure and a focus on one region cannot be representative. Ed-

inburgh is an exceptionally prosperous region, not only in Scottish terms.

However this prosperity and activity in economic development makes Ed-

inburgh an interesting subject for examination. Thus the focus of this thesis

lies on the developments in Edinburgh. Economic development is certainly

influenced by a vast number of factors and it is impossible to take all of

them into account. Within this thesis the emphasis lies on governmental in-

fluence on the developments. However European development measures

are not considered. Accordingly the thesis aims to look at the ways the

promotion of economic development is carried out in Scotland and tries to

assess the measures on the background of the distinctiveness of Scotland

and Edinburgh.

Thus in the first chapter the thesis takes a look at Scotland as a whole, ex-

amining the physical environment, the administrative framework and its re-

cent changes. Furthermore it looks at the economic legacy of the heavy

industries and the recent developments in the Scottish economy. Subse-

quently the history and institutions of the promotion of economic develop-

ment in Britain and Scotland are presented. The last part of the first chapter

deals with the planning framework in Scotland. The second chapter por-

traits Edinburgh's economic structure. The key industries are presented

briefly as are the institutions of economic development. Afterwards parts of

the Edinburgh development plan are examined. The third chapter focuses

on the Waterfront project in Edinburgh. The background of waterfront revi-

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

talisation is presented. The project and its participants are then examined in

some detail. Finally a conclusion is drawn on the developments in Edin-

burgh.

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

1 Scotland

1.1 Physical

Environment

Scotland occupies the northern part of the biggest of the British Isles and is

located between latitudes 54° 37' N (Mull of Galloway) and 60° 52' N

(Muckle Flugga, Shetland) and between longitudes 0° 45' W (Out Skerries,

Shetland) and 7° 40' W (Mingulay). It covers an area of 79 000 sq km includ-

ing numerous lakes and islands. Scotland, exposed to the Atlantic ocean

and the north

sea and very

much formed

through vol-

canic and gla-

cial activity is

quite a het-

erogeneous

and dissected

region. Scot-

land can be

divided into

three parts

separated by

the main faults as follows. In the north there are the Highlands which are

separated from the Midlands by the Highland boundary fault. In the south

then follows Southern Scotland divided from the Midlands by the Southern

Upland fault. However these parts are often very diverse in itself and need

to be subdivided.

Source: De Grote

Bosatlas

Figure 1: Scotland

The Highlands occupy two thirds of the total area of Scotland and are sub-

divided by the Great Glen fault into the northern zone and the central

zone. Most of this area lies above 1500 ft (460 m). The rainfalls are heavy

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

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and the summers are cool and short. There is little mineral wealth and ex-

cept for Brora, coal is absent.

The north-west Highlands are a plateau of bleak monotonous rocks which is

the least populated large area in the British Isles. The mountains are cov-

ered with wet, peaty moor land and raise to heights up to 3500 ft (1070 m).

In some more favoured areas covers of heather and grass can be found.

The height of this area lifts the annual rainfall up to over 200 in (5080 mm).

Snow falls on an average of forty days a year and the frost-free period is

under ninety days. The area with its high rainfall, steep slopes and pattern

of valleys is important for hydroelectric power.

To the west the isles, consisting of Arran and Bute, the inner Hebrides, the

outer Hebrides, The Orkneys and Shetlands, are in itself quite diverse though

all show lower rainfall than the mainland Highlands. While Arran and Bute

and the inner Hebrides are dominated by complex intrusions and meta-

morphoric schists arising from Silurian to Permian volcanic activity as well as

glacial shaping and morainic deposits, the Orkneys consists mainly of Old

Red Sandstone, are very flat and exposed to strong marine erosion. On the

outer Hebrides the Lewisian gneiss is predominant. Peaks here can rise up

to 2600 ft (790 m). The Shetlands are rather similar to the mainland High-

lands.

On the east coast there are the Plain of Caithness and the western Moray

Firth Lowlands. In this area Old Red Sandstone overlain by deposits from

glacial debris makes for favourable soils. In Brora there is a small coal field.

South of the north-west Highlands and separated from them by the Great

Glen is the central zone. The largest area is occupied by the Grampians.

This area shows a vast variety of features because of the differences in

structure weathering and erosion. Especially in the east the rainfalls reach

120 in (3050 mm) and the peaks can rise up to 4000 ft (1220 m) in the

Cairngorms. The floor has much poor morainic debris and some soils de-

rived from the occasional Old Red Sandstone. As a result of the two glacial

periods the typical U-shaped valleys, hanging valleys, high corries and

many low cols can be found. The area is dissected by numerous lakes and

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

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streams, which isolate the few arable parts from each other. The lakes and

valleys however are important for the generation of hydro electricity.

On each side of the Grampians to the east and the west there is the low-

land fringe. On the east the Moray Firth lowlands and the Buchan peninsula

offer average to good soils and rainfall is under 25 in (635 mm). The highest

tips here are no higher than 500 ft (150 m). The climate is sunny and the

summer days are long. The Buchan area has probably been spared from

glacial stripping and thus being one of deposition of drift material rather

than intense erosion. On the west coast is the very dissected area of Lorne,

Cowal and Kintyre. It is lower in height and has a mild, moist climate. This

area again is utilised for the generation of hydro electricity.

The Midlands of Scotland, located between the two main Scottish fault

lines, are another geographical entity. The term "lowlands" is often used to

describe this area though most of the area is over 400 ft (120) high with hill

masses rising up to 2000 ft (600 m) and above. The climate is mainly con-

trolled by the Atlantic, but there are variations from east to west. While the

west is wetter with 40 50 in (1016 1270 mm) of rainfall and milder, the Lo-

thians get about 25 in (635 mm). However the east is likely to be affected

by cold continental air masses during winter. The Midlands are even more

diverse than the Highlands and their complex structure and relief, as a re-

sult of earth movements and the effects of glacial deposition make a sub-

division difficult but necessary.

In the north, next to the Grampians but separated from them by the High-

land boundary fault, there is the Strathmore corridor. This stretches from

Loch Lomond to Stonehaven. Old Red Sandstone is predominant in this

area, but the soils vary from wet and acidic in the west to rich soils derived

from glacial clays and alluvium in the east, where most of the land is culti-

vated.

Parallel to this area in the south there are the volcanic hills. They consist of

horizontally bedded lava capping the Carboniferous shales. The rocks give

comparatively poor soils and the steep slopes of the hills often carry heath

or peat bogs.

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

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To the south lies the "waist" of Scotland. The climate and the soils of this

area allow varied farming and the minerals created manufacturing indus-

tries. Therefore this is the most densely populated area in Scotland. Various

coal basins, broken by submergence, uplifting or faulting exist here. The

major basins of coal measures are Ayrshire, Lanark-Stirling-Clackmannan

and Fife-Midlothian. The Lanarkshire coalfield in the west is the most readily

accessible and was therefore the first to be worked on.

The slopes of the Clyde valley rise to 500 ft (150 m) and the soils are rather

shallow. The climate is wet but the rainfall is well distributed over the year

and the land is suitable for farming.

Going further east the rainfall becomes lighter and the soils get better. The

Fife peninsula features a few of the better soils but the Lothians with their

soils from Red Old Sandstone in combination with a sunny climate offer

some excellent farmlands.

Southern Scotland, occupying the area between the Southern Upland fault

and the Scottish-English Border, is not quite so heterogeneous as are the

other two parts. However a subdivision might be useful.

Thus the central highland area of southern Scotland is flanked by two low-

land zones. The sandstones of the Ordovician and Silurian series produced

a broad plateau in the central zone with only a few high peaks rising to

2500 2700 ft (760 820 m). The hills are mainly covered with grass and

heather but also peat. Especially in the east there are granite intrusions and

the climate is wetter here. The rainfall of 60 100 in (1524 2540 mm) is

evenly distributed. So this is another area ideal for the generation of hydro-

electricity.

The area to the east lies generally below 600 ft (180 m). This part shows a

high population density. Thick deposits of boulder clay make up for agricul-

turally good soils. The moderate rainfall of 25 30 in (635 762 mm) is evenly

distributed over the year and the summers are warmer than in the rest of

the country. This region boasts a few of the oldest towns in Scotland like

Jedburgh or Kelso.

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The Silurian rocks in the west are covered with drift. The climate is wet but

the drift and alluvial soils permit cultivation (King, W. J., p. 107 155).

1.2

Population and administrative structure

Scotland is a country within the United Kingdom of Great Britain and North-

ern Ireland. In 2002 the

estimated population of

Scotland was 5.1 million

which accounts for 8.5%

of the UK population.

Scotland as a whole has

experienced a 0.6%

decline in population

numbers in the time

from 1991 to 2002,

though there is a con-

siderable variation

across Scotland. The

council area of West

Lothian had a propor-

tional increase of 10.3%,

while Eilean Siar saw a

decrease of 10.7% (see

Table 1). The population

density averaged 65

people per square kilo-

metre in 2002, which is

the lowest in the UK. This

may however be mis-

leading, since again

there is a considerable

amount of variation

Table 1:

Population and population change by council

area, June 2002, Scotland

Population

(thousands)

Change in

population

19912002 (%)

Aberdeen City

209

2.3

Aberdeenshire

227

5.3

Angus

108

0.2

Argyll & Bute

2.7

Clackmannanshire

0.4

Dumfries & Galloway

147

0.1

Dundee City

144

7.3

East Ayrshire

120

3.5

East Dunbartonshire

107

2.6

East Lothian

7.5

East Renfrewshire

4.5

Edinburgh,City of

448

2.7

Eilean Siar

10.7

Falkirk

146

2.1

Fife

351

1.0

Glasgow City

577

8.2

Highland

208

2.1

Inverclyde

8.5

Midlothian

1.2

Moray

3.3

North Ayrshire

136

1.7

North Lanarkshire

321

1.7

Orkney Islands

1.6

Perth & Kinross

135

6.1

Renfrewshire

172

2.1

Scottish Borders,The

107

3.4

Shetland Islands

2.6

South Ayrshire

112

1.3

South Lanarkshire

302

0.1

Stirling

6.5

West Dunbartonshire

4.5

West Lothian

160

10.3

Scotland

5,055

0.6

Source: ONS, 2004b, p. 19

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

across Scotland. The highest density is reached in Glasgow (3,290 peo-

ple/km

) and the lowest in the Highlands (8 people/km

). The vast majority

of people (around 3/4 of the population) lives in the central belt where the

two biggest cities, Glasgow (577,000) and the capital Edinburgh (448,000),

are located.

In terms of administration there has been a considerable amount of

change in the UK and Scotland. In 1997 the White Paper Scotland's Parlia-

ment has been published to set out a framework for devolution. In the

same year a referendum was held in Scotland in which 74% of those who

voted endorsed the proposal for a Scottish Parliament and Executive. In the

following year the Scotland Act 1998 established the Scottish Parliament

and Executive and parliamentary elections were held in May 1999. On 1

July 1999 the Scottish Parliament and Executive took up their work and the

first Scottish Parliament for almost 300 years came to power. The Scottish

Parliament is responsible for anything that is not reserved to Westminster by

the Scotland Act 1998. Thus the Scottish Parliament is responsible for most

health issues, education and training, local government and social services,

housing and planning inward investment and promotion of trade, eco-

nomic development and tourism further more for most aspects of law and

home affairs, including prisons, the prosecution system and the courts. It is

responsible for the police and the fire services, the road network, bus pol-

icy, ports and harbours, agriculture, the environment, fisheries, forestry and

food, the natural and built heritage, sport, culture and the arts and lan-

guage and statistics, public registers and records. Other responsibilities are

administration of public education, science and technology, youth and

community services, the arts, libraries, museums and galleries, Gaelic,

broadcasting, sport and tourism as well as protection and presentation to

the public of historic buildings and ancient monuments.

The Scottish parliament is mainly financed by a block grant from the UK Par-

liament. Other sources of revenue include non-domestic rate income. The

Scottish Parliament is solely responsible for the allocation of the budget. The

Scottish Parliament has the power to change the basic rate of income tax

in Scotland by 3 pence commonly called the tartan tax. The right to vary

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

the income tax has not yet been exercised and possible effects are said to

be marginal (ONS, 2004b, p. 19 21/487).

Figure 2: Unitary council areas in Scotland

100 km

Source: ONS, 2004b, p. 22; scale added

Scotland has a single-tier administrative system. During the last century the

local government structure has been changed three times (1929, 1979 and

1996). The latest restructuring saw the change from a two-tier system with

split responsibilities between upper-tier districts and lower-tier councils to

the unitary system of today (Fairley, J. p. 103/104). Scotland's 32 unitary

councils (see figure 2) are responsible for services including education, so-

cial work, police and fire services, roads, public transport, local planning,

urban development, housing, libraries and recreation. Though the councils

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

are independent in their day-to-day businesses, their activities in planning,

finance, transport and housing is subject to governmental supervision.

1.3

The Scottish economy

This chapter aims to give a brief overview of the main developments in the

Scottish economy since the beginning of the last century.

1 . 3 . 1 E a r l y i n d u s t r i e s

One of the major industries in Scotland in the late 19

century was the tex-

tile industry. Cotton spinning and jute manufacturing was predominant in

Dundee. Though at the turn of the century cotton spinning went into de-

cline this was compensated by textile giants like J.&P. Coats in Paisley

which was then one of the biggest companies in Britain. At the eve of WWI

the Scottish textile industry displayed the entire spectrum of firm sizes (De-

vine, T. M., p. 25; Payne, P. L., p. 14). Another very important sector of the

Scottish economy was coal mining. In the early years of the 20

century

Scottish coal mining was the most concentrated in Britain and had the

highest average output per man-hour in the United Kingdom. Mining saw

some heavy capital investment since 1850 and family partnerships were

turned into limited companies. The large Scottish colliery proprietors were

all steel masters, reflecting a high degree of vertical integration. By 1885

40% of the British make of Siemens steel was produced in Scotland. Around

3/4 of the combined products went into what was indisputably the most

prominent of all Scottish industries, namely shipbuilding. On the eve of WWI

the Clyde built 1/3 of the British and 1/5 of the world's shipping tonnage.

The sector was dominated by independent family firms. Shipbuilding in

Scotland was characterised by labour intensive techniques which enabled

the employer to react to downswings in the economic cycle by simply

reducing the capacities through redundancies. Scottish heavy industries

were not confined to shipbuilding. Scottish heavy engineering produced

locomotives, railways, bridges or piers. By 1913 a collection of these interre-

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

lated activities employed ¼ of the Scottish labour force (Payne, P. L., p.

15/16). The Scottish economy was heavily export orientated and Scotland

was depended on the access to overseas markets. Scotland benefited

from the expanding British Empire and the global trade revolution as well as

the vast investments in the global transport system. Furthermore Scottish in-

vestors put money into American, Canadian, Australian and Asian railway

stock, land and cattle companies or mines. Scottish foreign investment rose

from 60 million to 500 million between 1870 and 1914 which was highest

per head in the UK (Devine, T. M., p. 28). However the well-being of the

Scottish economy depended on these basic heavy industries which Scot-

land was more intensely committed to than any other region of the UK. This

over-commitment was strengthened by the upcoming world war and the

post-war period even saw a boom and a labour rise in these industries. This

was despite the fact that the first flaws became visible. The Lanarkshire coal

fields had become progressively more exhausted and the eastern fields

were increasingly confronted with German and Polish competition. Al-

though there was an overall decline in the traditional industries, the re-

source did not move to activities that possessed greater potential for

growth. The heavy industries clung to their resources since a permanently

decline was not foreseeable. Furthermore was the industry dominated by

private limited companies which appeared to be more resistant to change

or even closure especially since there existed a considerable amount of

collusion. The advent of WWII once more promoted the traditional Scottish

industries and in effect helped to freeze the structure of the Scottish econ-

omy which reflected comparative advantages that had ceased to exist.

On the other hand there was a lack of light industries and services induced

by a lack of skilled labour, a lack of materials, a low level of income and

marketing problems, all of which added to the persistence of the traditional

heavy industries. So did the socially motivated political interventions to sup-

port the declining industry. Anyway change was inevitably and in the 1970s

the network of interdependent industries collapsed. Contrary to other re-

gions in the UK to a certain extent, service industries were not able to soak

up the redundant labour force. However a strong financial industry was es-

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

tablished in the 1980s mainly in the east. Building upon the 19

century leg-

acy of the Bank of Scotland, companies like Standard Life, Scottish Amica-

ble or Scottish Widows gained considerable importance (Payne, P. L., p. 17

- 24).

1 . 3 . 2 S i l i c o n G l e n

Within the last three decades Scotland's industrial structure caught up with

that of the rest of the UK. The restructuring was primarily achieved through

foreign direct investment in the electronics sector. American companies

established branch plants in Scotland to exploit the European market and

circumvent the high European tariffs in the 1950s (Payne, P. L., p. 24). The

pioneer was IBM, which come to Scotland in 1954 to avoid the bombed

London. IBM moved into buildings in Greenock which were erected by the

government (Hilpert, M., p. 21). IBM was followed by NCR, Burroughs and

Honeywell. The companies were influenced in their decision by govern-

mental regional policy like financial assistance or custom-made facilities in

New Towns and moved into the Scottish central belt to East Klibride,

Livingston, Glenrothes and Cumbernauld. In the 1960s followed companies

like National Semiconductor, Motorola and Hewlett Packard. By 1983 about

300 companies in Scotland were engaged in the manufacturing of infor-

mation systems, defence related products and avionics. Scotland pro-

duced 79% of the UK and 21% of Western Europe's output of integrated cir-

cuits. By 1990 these accounted for 42% of Scotland's manufactured exports.

In the 1990s Japanese companies established branch plants in Scotland:

NEC in Livingston, Mitsubishi in Haddington, Glenrothes and Livingston; Oki

in Cumbernauld, JVC at East Kilbride and Terasaki at Clydebank. Electron-

ics have become the crown jewel in the Scottish economy. The agglom-

eration of these industries in the traditional industrial belt bounded by Edin-

burgh, Dundee, Greenock and Ayr has become known as Silicon Glen

The cluster of electronic firms generated concentration economies which

led to the area's attractiveness to high-technology companies (Payne, P.

Glen is Gaelic meaning valley

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

L., p. 24 - 26). Silicon Glen is the most important high-tech region in the UK

apart from the Western Crescent in the prosperous south of England. There

are more computers produced per head in the Silicon Glen than anywhere

else in the world (Hilpert, M., p. 23). The establishment of a network of inter-

dependent structures was hoped to promote growth and support indige-

nous development. But in Scotland this development has rather led to in-

creasing dependence on multinational companies. Scotland faces interna-

tional competition for the volatile capital of these cost-cutting, footloose

companies and the threat of closure. Scottish companies fall behind, since

the multinationals import their material inputs or are subcontracting local

companies without R&D or own products. This development has prevented

considerable indigenous growth in this sector and Scottish companies are

held to develop own products and shift the attention towards software de-

sign. However this depends to a certain degree on the willingness of the

multinational companies and the capacity of the education system

(Payne, P. L., p. 24 29).

1 . 3 . 3 N o r t h S e a O i l

Another very important element of the economic development in Scotland

is North Sea oil. The discovery of the oil in 1969 was expected to have the

potential to restructure the Scottish economy. However Scottish companies

had only a share of 22% in the oil industry. North Sea oil could not transform

the structure of the Scottish economy, since an indigenous oil sector was

not established. Multinational companies were already established at the

time the oil was discovered off the Scottish coast and national companies

were not equipped to compete. The steel industry was not sufficiently able

to supply the industry with platforms, because it was unable to attain the

required production processes in time. The Scottish industry did not under-

stand the requirements of the oil and gas industry until the opportunity was

lost to foreign companies (Payne, P. L., p. 29 32). The government was

quick to grant licences to interested international companies to solve the

crisis in the public finance, which prevented Scottish companies from de-

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

veloping the required expertise (Devine, T. M., p. 597). Despite this general

trend some Scottish companies could establish themselves like the Wood

Group, Ramco, Rigblast plc or Ferguson Seacabs (Payne, P. L., p. 32). And

while the overall impact of North Sea oil on the Scottish manufacturing in-

dustry may have been insignificant, the impact on employment and house

prices in the north-east and the Shetlands is undeniable. By the 1990s the

Grampian region had become one of the most prosperous regions in Britain

and Aberdeen became the oil capital of Europe (Devine, T. M., p. 597).

Anyway a large number of firms established around Aberdeen, but the

structure was similar to that of the electronic sector and no indigenous

technology was built up, which could also have been exported. The reces-

sion between 1985 and 1987 led to a leaner structure but also hit the na-

tional companies hardest. By 1987 three dominant conglomerates

emerged, namely

Baker Hughes, Halli-

burton and Schlum-

berger which to-

gether controlled

most of the Scottish

oil industry (Payne, P.

L., p. 32 36).

Table 2:

Conclusively it can

be said that since

the 1960s Scottish

policy put the em-

phasis on the num-

ber of firms rather

than on the structure.

The structure of the Scottish economy by distribution of em-

ployment by sector - %

Employment Categories

1901

1990

Agriculture, Forestry and Fishing

12.0

1.5

Energy and Water Supply

6.8

3.1

Metals, Minerals and Chemicals

3.6

2.4

Metal Goods, Engineering, Vehicles

8.0

8.5

Other Manufacturing

21.7

10.3

Construction

7.4

6.0

Distribution, Hotel, Catering

7.7

19.4

Transport, Communication

7.7

5.8

Banking, Finance, Insurance, Business

Services, Leasing

0.9

9.0

Public Administration and other ser-

vices

17.0

34.1

Not Classified

7.3

Source: Payne, P.L., p. 14

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

1.4 Economic

Development

The classical factors of production, labour, land and capital are added

technological innovation which together produce economic output. Neo-

classical theory demands the government simply to provide a framework in

which the market forces can act freely in order to achieve an optimal allo-

cation of factors of production and wealth and economic progress.

According to Schumpeter, innovation is exercised by entrepreneurs, which

is the mainspring of economic and social progress. The extent of progress is

determined by the social climate in which the entrepreneurs are acting.

Though in fact an element of market failure, monopoly is needed in this

context to provide the background for the entrepreneur to take the neces-

sary risks. Thus economic development emanates from an innovator who

successfully brings together factors of production and is eventually copied

by a cluster of followers, who in turn break up the monopolistic structures.

As does Schumpeter's theory, most economic theories lack a spatial ele-

ment. Building upon Schumpeter's theory Perroux added the observation

that the entrepreneurs are concentrated in particular places, leading to a

domination of some places and to the dependence of others. While

Schumpeter thought monopolies to be a necessary part of development,

Perroux thought this to be true for spatial concentration, since resources are

not spread evenly throughout space. This considered, the classical assump-

tion of costless mobility of factors of production becomes doubtful (Higgins,

B., p. 39 41).

Going back to neoclassical theory of markets and the role of government,

the mentioned framework contains the government functions of stabilisa-

tion, allocation and distribution. The stabilisation function refers to the gov-

ernment's macroeconomic role. An optimal allocation of resources is only

given when individuals are fully informed about choices, there is no mo-

nopoly power, property rights are defined and factors of production are

perfectly mobile. Since the market fails to meet these conditions, govern-

ment is required to improve the allocation process. Specific goods and in-

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

come are unlikely to be distributed in a desired way by market forces, thus

the government is required to take redistributive measures (Newlands, D.,

1999, p. 11/12). This is especially the case when the private costs and bene-

fits of using resources do not corresponded to the social costs and benefits.

Therefore the provision of public goods, characterised by non-rivalness,

non-excludability and non-rejectability is a government requirement. How-

ever there are only few pure public goods such as defence or the mone-

tary system, since spatial aspects like jurisdictional partitioning, tapering

and externalities abate the characteristics of pure public goods (Pinch, S.).

Apart from being site specific, externalities like pollution are social costs

which have to be regulated by public intervention. On the other hand

there are external benefits like parks, schools or research and develop-

ment. Swales argues that if R&D is left to the free market, only a sub-optimal

expenditure can be expected and thus calls for public intervention, which

here can be defined as a positive externality (Swales, J. K., 1983b, p. 189).

Newlands even claims that government should, in addition to the three

neoclassic functions already mentioned above, hold a growths function to

increase the dynamic efficiency of the economy (Newlands, D., 1999, p.

12). Additionally private costs may differ from social costs in terms of oppor-

tunity costs. This is the case when the costs for putting an unemployed la-

bour force into work, in terms of lost profit, is lower to the society than to the

potential employer. This means that labour has to be subsidised to benefit

the employer (Swales, J. K., 1983b p. 189).

Summoning up these few thoughts, market failure, arising from risk aversion,

imperfect information and the existence of externalities provides a ration-

ale for state intervention. Economic development policies can be seen as

a public good incorporating a dynamic element and occupy distinct

ground between macroeconomic policy and service provision (Newlands,

D., 1999, p. 11 - 14). Conclusively economic policy describes all principles

and measures taken by public bodies concerning the spatial structure of

the economy within a country (Sedlacek, P., p. 93).

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

1 . 4 . 1 H i s t o r y o f e c o n o m i c p o l i c y

An interventionist policy has to be justified, because the ideal of self

regulating market forces is deeply imbedded in the western society. This is

surprising since an economy left to its own has only been realised for a short

period of time, if at all, in the economic history. Between the 16

and 18

century in Europe, mercantilism established a culture of various govern-

ment interventions, since the paramount aim was to achieve a positive

balance of trade. In the early times of industrialisation on the continent, in-

novations were often imposed on the entrepreneur by the government

rather than self-induced. The 19

century saw a liberalistic period, which in

turn led to monopolistic structures, exploitation and deficient urban struc-

tures. As a consequence of these developments communism and socialism

emerged. In the post-war period governments emerged which provided a

legal framework for the economy, supervised the economy, dealt with so-

cial problems and influenced the spatial structure of the economy (Sed-

lacek, P., p. 95 97).

In the more recent past there has been a considerable degree of change

in terms of regional policy in Europe. The spatial policies which aimed at the

redistribution of economic activity within a national economy from pros-

perous to more disadvantaged areas have been replaced by suprana-

tional programmes which are not further considered in the context of this

thesis as well as local initiatives promoting economic development 'from

below'. Regional development agencies (RDAs) have been part of the re-

gional policy in a number of countries in Europe since the 1950s (Danson,

M., Halkier, H., Damborg, C., p. 14). According to Yuill and Allan an RDA is a

'publicly-financed institution outside the mainstream of central and local

government administration' designed to promote economic development

'in regions that are generally designated as problem or priority areas'

(quoted in Danson, M., Halkier, H., Damborg, C., p. 17). This however may

be too narrow, since many agencies have, in addition to the economic

function, responsibilities for environmental and social developments (Dan-

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

son, M., Lloyd, M.G., Newlands, D., 1992a, p. 297). Also is it questionable if

an area covered by an RDA has necessarily to be a problem or priority

area. Thus Danson, Halkier and Damborg employ a more restrictive and

plain definition: An RDA is 'a regionally based, publicly financed institution

outside the mainstream of central and local government administration

designed to promote economic development' (Danson, M., Halkier, H.,

Damborg, C., p. 17).

The development tools of traditional regional policies and the RDAs are

very different indeed. While national-level policies are obviously employed

by central government, RDAs are established at the regional level. This is

intended to have the advantages of tailor-made strategies for specific ar-

eas and a more business-like approach outside the bureaucracy. Further-

more RDAs, as semi-autonomous bodies, are not the target of direct politi-

cal interference and are supposed to act beyond the short term horizon of

party political manoeuvring. This is often described as an arms-lengths de-

gree of operational freedom (Danson, M., Halkier, H., Damborg, C., p.18).

The following table highlights the differences between national-level re-

gional policies and RDAs.

Table 3: Differences between national-level regional policies and RDAs

Characteristics

Traditional top-down

New-model bottom-up

Organisation

National

Government department

Bureaucracy

Generalist qualification

Regional

Semi-autonomous body

Business-like

Specific expertise

Operational freedom

Limited

Arm's length

Economic Objectives

Interregional equality

Growth of national economy

Redistributed growth

Interregional competitiveness

Growth of regional economy

Indigenous/imported growth

Mode of operation

Non-selective

Automatic/discretionary

Reactive

Selective

Discretionary

Proactive

Policy instruments

Bureaucratic regulation

Financial inducements

Advisory services

Public provision

Financial inducements

Advisory services

Public provision

Source: Danson, M., Halkier, H., Damborg, C., p.19

In the following the development of economic development policies in

Scotland is presented briefly.

E c o n o m i c D e v e l o p m e n t i n S c o t l a n d

C h a n g e s a n d P r o s p e c t s f o r t h e E c o n o m i c C o r e R e g i o n E d i n b u r g h

1 . 4 . 1 . 1 R e g i o n a l S e l e c t i v e A s s i s t a n c e

In 1934 on the background of the Special Areas Act, some areas of Great

Britain were designated for government promotion as Special Areas. These

areas have been chosen because of their high unemployment numbers.

Scotland was assigned a Special Area in west-mid Scotland around Glas-

gow. The British government allowed advantageous credits for start-ups

within this area and promoted the location of enterprises within trading- or

industrial estates. The Distribution and Industry Act (1945) led to the renam-

ing of the areas into Development Areas which in Scotland now included

additionally the areas around Inverness and Dundee. The Town and Coun-

try Planning Act (1947) introduced the Industrial Development Certificate

(IDC), which had to be awarded by the ministry for all industrial develop-

ments of more than 465 m

. This was intended to decentralise the eco-

nomic agglomeration in south-east England, but failed to benefit the pe-

ripheral regions of the north rather than the neighbouring regions in the

south. In 1960 the Development Areas were abolished in favour of Devel-

opment Districts. These were again based on unemployment numbers and

their location was often changed and extended in the following years. At

some point almost half of Scotland's area was covered. The success of a

relocation of jobs decreased with distance to the southern agglomeration

areas. This means that Scotland did not gain significant numbers of jobs.

Though unemployment remained highest in the development areas, the

areas which were renamed Development Areas again in the late 1970s

expanded ever further and were subdivided into Special Development Ar-

eas, Development Areas and Intermediate Areas. The Thatcher govern-

ment introduced considerable changes to the system in 1979. This was

foremost characterised through a major financial cutback in public ser-

vices and thus in the promotion of economic development leading to a

substantial downsizing of the development areas. In 1984 the development

areas where once again renamed Assisted Areas and subdivided into De-

velopment Areas and Intermediate Areas. The regional promotion of the

economy has been reduced recently in financial terms. Parallel to that de-

Details

Seiten
Erscheinungsform: Originalausgabe
Jahr: 2004
ISBN (eBook): 9783832487355
ISBN (Paperback): 9783838687353
DOI: 10.3239/9783832487355
Dateigröße: 1.6 MB
Sprache: Englisch
Institution / Hochschule: Rheinisch-Westfälische Technische Hochschule Aachen – Philosophische Fakultät, Geographie
Erscheinungsdatum: 2005 (Mai)
Note: 1,3
Schlagworte: schottland wirtschaftsförderung raumplanung regional development agency flächenrecycling

Autor

Tim Alers (Autor:in)