As an economist with an interest in the determinants of economic growth, and the relative long-term underperformance of the Scottish economy in terms of its economic growth rate, I was somewhat surprised by Alf Young's rather curmudgeonly comments about the Scottish Government's attempts to improve our economic growth rate (The Herald, February 8).

I think it is vitally important, and correct, for the Scottish Government to have the improvement of Scotland's economic growth as a central plank of government policy. Why? It is through improved economic growth that society can facilitate important objectives, such as the creation of more and better-paid jobs, more and better public services, and the provision of a fairer and more equitable society. Even a small degree of underperformance in economic growth on a year by year basis can cumulate into dramatic changes over the long run, thereby making it difficult to satisfy the above objectives. For example, if the United States had grown by 1% less per annum over the past 100 years, it would rank 44th in the world, with a standard of living close to that of Mexico, rather than being at the top of the GDP per capita league as it is today.

How can Scotland get its economic growth back to a rate which offsets the accumulated underperformance that we face today? One key way involves increasing the overall human capital available to the production process and, in a Scottish context, this could be achieved by attracting back the many highly skilled people who have been educated in Scotland but have left because of a lack of home-grown opportunity.

The returning diaspora to Ireland has certainly had a big impact on the Irish growth rate. But it is a bit of a Catch-22 situation: to attract such people back to Scotland the dynamism of the growth process has to be kickstarted to provide the necessary opportunities and the incentives. How can this be achieved?

The answer lies in what many regard as the holy grail of economic growth: increasing our total factor productivity, or technological input into the production process. This has a variety of aspects, of which two are worthy of mention. Research shows that countries with relatively low growth rates also have relatively low levels of research and development (R&D). Scotland is already in this category and underperforms, for example, relative to the UK. One way of increasing R&D levels would be by altering the incentives to business to engage in more R&D investment. Another would be to attract high-end foreign direct investment which embodies the latest R&D.

The ability of a country to trade is also a key driver of economic growth, both directly and indirectly. However, academic research shows that a country's trade can be seriously impeded by frictions, or transaction costs, which include factors such as transportation costs and the effects of a one-size-fits-all monetary policy which exists in the UK.

These frictions could be addressed again by altering incentives to business, say, by cutting corporation tax rates.

In sum, until the Scottish Government has access to the economic levers that will allow it to incentivise the Scottish economy, it is unlikely that we will see Scotland's economic growth moving to where it should be. And it is important to note that the required change in incentives does not seem be that large (a 10% cut in corporation tax rates can produce a 1% increase in a country's growth rate).

To focus on the Budget passed this week in the Scottish Parliament as a test of the government's commitment to its economic growth strategy, as Alf Young seems to do, is somewhat wide of the mark, to say the least.

Ronald MacDonald, Adam Smith Professor of Political Economy, University of Glasgow.

So the LibDems abstain on the Budget vote and make no deals with the SNP to accommodate LibDem priorities. They can make deals with Labour to form a coalition, though.

Tavish Scott is quoted as stating (The Herald, February 7) that the SNP Budget was "opaque, nebulous and exclusive" and "made the wrong choices". Call me pedantic, but if it is so opaque and nebulous, how can he determine that wrong choices have been made? If he would write detailing the wrong choices, that would be of interest, though it would disprove the Budget being nebulous. Still, I expect the LibDems will try to ride both horses as usual and then abstain or bet on both.

And as for a LibDem calling anyone else's policies nebulous, trying to find out LibDem policies is akin to nailing down the wind. And what happened to their policies on discussion and consensus? Or is that only with Labour?

Tom Chalmers, 800 Crow Road, Glasgow.