One of Scotland's leading nationalist economic development experts says the Scottish Government must consider "very radical" regulation and tax cuts to boost innovation – or face the country becoming another Greece after independence.
Dr Robert Crawford, who from 2000 to 2004 was chief executive of Scottish Enterprise, is currently director of innovation, investment and growth at Nesta – the National Endowment for Science, Technology and the Arts – a UK Government-endowed enterprise charity.
His warning, made in a private capacity, came in an article for the Sunday Herald addressing Scotland's "poor economic growth rate born of our low levels of innovation". Read the full article here
Coming with a declaration of support for a one-question referendum, the remarks by Crawford, who was at one time the prospective SNP parliamentary candidate for North Ayrshire and Arran, will be seen as implicit criticism of the policies of the Scottish Government and Scottish Enterprise, which he says are being "pursued to little effect".
Instead, he calls for "very radical alternatives to policies which have done little to foster innovation and private sector-driven growth." He said: "I don't just mean about lower corporation tax, but going beyond this to an avowedly low-regulation, low-tax economy."
He called for a radical review of public service delivery – not necessarily meaning privatisation; policies to attract highly skilled immigrants; and a review of the school curriculum to teach children more about technology and worldwide socio-economic changes.
"Unless and until the innovation gap is addressed then Scotland will continue to be a laggard in the international growth stakes. The problem goes to the heart of how Scotland pays for the goods and services we consume and the number of high-value jobs we create post-independence.
"Successful innovation makes consumption and distribution possible. Without it then services will have to be cut, and borrowing and taxes will have to rise. Welcome to Greece – a really low-innovation economy."
Crawford said he was "disappointed" by the quality of economic policy debate over independence, and by what he called the Scottish Government's "apparent unwillingness to tackle the single most important economic issue: [Scotland's] relatively poor economic growth rate born of our low levels of innovation".
He added: "Given the magnitude of [the constitutional process] we are embarked upon it is essential that we have a deeply serious debate about the difficult issues which will ensue if Scotland chooses independence. So far I'm not seeing much evidence of that.
"Unless we get much better at all forms of innovation then an independent Scotland will be in serious difficulty."
Saying Scotland spends less on business research and development than England, Wales or even Northern Ireland, he points to poor performance in "intangible" innovation such as skills development, management, organisational processes and marketing.
He says these are the "well-spring of wealth creation", contributing up to 60% to UK productivity in the 1990s and 2000s.
Crawford cites a March 2011 Scottish Enterprise report showing Scotland "languishing" in the third quartile of the OECD league table for innovative activity, and he singled out SMEs, 99% of Scotland's business base, as having a "seriously depressing" performance in promoting innovation.
"Without a significant surge in innovative businesses then our trend growth will continue to bump along on a low-level trajectory."
Crawford also warned against future over-reliance on "importing innovation", which he said was vulnerable to sudden reverses such as the demise of Siicon Glen in the 1990s.
"However laudable Scotland's efforts in attracting inward investment are – some 6000 jobs last year – it is still significantly less than was achieved in the 1990s and the surge enjoyed then wasn't sufficient to address Scotland's comparatively poor performance in innovation."
Colin Borland, head of external affairs at the Federation of Small Business (FSB) Scotland, said: "It is wrong to suggest that Scotland's small businesses are uninterested in innovation. FSB figures show that, in 2012, 68% of our Scottish members had introduced new or improved products or services in the past two years – up 16% since 2009."
A spokesman for the Scottish Government said independence would let it tailor policies to Scottish priorities and deal with problems in the Scottish economy.
He added: "For example, independence would enable Scotland to define its own intellectual property policy – potentially faster, simpler and more affordable for SMEs than the current UK regime, making innovation easier and more profitable."
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