Press Release
Leading economists calls for Scotland to embrace a ‘mission-oriented’ industrial strategy
03 August 2024
03 August 2024
A new report authored by Professor Mariana Mazzucato and Laurie Macfarlane outlines a new strategy to revitalise Scotland’s economy, transition to net zero and tackle inequalities.
The report, published jointly by the UCL Institute for Innovation and Public Purpose (IIPP) and Future Economy Scotland, identifies three systemic challenges facing Scotland’s economy: the need to raise productivity growth, decarbonise the economy and tackle inequalities. However, a “chronic problem of low investment” continues to undermine living standards, stifle innovation, and hold back Scotland’s net zero transition, the report finds.
The Scottish Government is expected to publish proposals for a new green industrial strategy later this year. However, the new research warns that the government’s new strategy must “avoid reheating old orthodoxies”. As other countries across the world implement ambitious industrial strategies, Scotland risks being left behind.
The report calls on the Scottish Government to embrace a ‘mission-oriented’ approach to its new industrial strategy – replacing traditional, sector-focused strategies with cross-sectoral ‘missions’ that address major societal challenges. The focus of Scotland’s new industrial strategy should be on “system-wide transformation” rather than supporting a small number of sectors, Mazzucato and Macfarlane argue.
To support this, Scotland should learn from successful “entrepreneurial states'' across the world, where governments “actively shape and create markets, not just fix them”. To achieve this, the report recommends that the Scottish Government:
- Moves away from acting simply as ‘lender of last resort’ bailing out struggling firms, and instead embraces an ‘investor of first resort’ role – investing proactively to nurture new technological and industrial landscapes
- Promotes greater coordination between policies such as procurement, subsidies and innovation funding, as well as institutions such as Scottish Enterprise and the Scottish National Investment Bank
- Creates a new ‘social contract’ between government and business by attaching conditions on private sector access to state funding, and taking equity stakes in major projects
- Strengthens capabilities within Scotland’s public sector to reduce reliance on private consultancy firms
- Creates new governance models to break government silos and drive a mission-oriented industrial strategy across the Scottish Government
The authors also warn against the risk of relying on ambitious rhetoric without concrete policy action. Instead, a mission-oriented approach requires “major changes to the way that policies are delivered, the way that resources are allocated, and the way that government and public institutions operate”. Future research from IIPP and Future Economy Scotland will assess how the Scottish Government can most effectively harness all its available tools, institutions and capabilities to embed missions across the public sector.
Commenting on the report, Professor Mariana Mazzucato, who served on the Scottish Government’s Council of Economic Advisors between 2015 and 2022, said:
“Old approaches to industrial strategy are not well equipped to address 21st century challenges. To succeed, Scotland’s new industrial strategy needs to do more than just hand out support to certain sectors. Our report offers a clear roadmap for a new type of industrial strategy that catalyses cross-sectoral investment oriented around bold goals, and maximises the public value of these investments. By embracing a mission-oriented approach, the Scottish Government can drive investment and innovation-led growth, and align social and environmental priorities with economic goals.”
Laurie Macfarlane, Co-Director at Future Economy Scotland and IIPP Policy Fellow, said:
“As other countries embrace ambitious industrial strategies, it is critical that Scotland does not get left behind. Although the Scottish Government does not have control over all aspects of economic policy, this makes it ever more critical that the powers it does have are harnessed most effectively. The mission-oriented approach we outline aims to fully harness the Scottish Government’s tools, institutions and resources to drive the structural change that Scotland’s economy so desperately needs. In doing so, it can help deliver the First Minister’s three stated priorities of growing the economy, eradicating child poverty and tackling the climate emergency.”
-ENDS-
NOTES TO EDITORS
[1] In September 2023 the Scottish Government’s 2023-24 Programme for Government pledged to develop a green industrial strategy. The report from UCL IIPP and Future Economy Scotland is independent research, and is not formally connected to the Scottish Government’s own work on industrial strategy.
[2] Professor Mazzucato served on the Scottish Government’s Council of Economic Advisors between 2015 and 2022. She is no longer advising the Scottish Government in any formal capacity.
[3] The Institute for Innovation and Public Purpose (IIPP) at University College London (UCL) aims to develop a new framework for creating, nurturing and evaluating public value in order to achieve economic growth that is more innovation-led, inclusive and sustainable. IIPP is housed in The Bartlett, a leading global Faculty of the Built Environment at University College London (UCL), with its radical thinking about space, design and sustainability.
[4] Future Economy Scotland is a non-partisan think tank that aims to create a new economy that is democratic, sustainable and just. The organisation does not have a formal stance on Scotland’s constitutional future, and is not aligned to any political party or any politician. The organisation is a not-for-profit company limited by guarantee operating with charitable principles.
[4] To book an interview with the authors, please contact 07909107890