FOR decades, the Highlands were viewed as Scotland’s “left-behind” region. Indeed, throughout much of the 20th century, the prevailing consensus was of a “Highland Problem”. Willie Ross, the Secretary of State for Scotland said at the introduction of the Highlands and Islands Development (Scotland) Act in 1965: “The Highlander is the man on Scotland’s conscience.”

Sir Donald Mackay, one of Scotland’s leading economists of his generation, writing in the same year, even went so far as to argue that “the economic solution to the ‘Highland Problem’ is to induce the movement of labour out of, and not the movement of capital into, the area”.

Today, such a view would rightly be criticised – not just as a failure to appreciate and value the distinct economic, cultural, and social fabric of the Highlands, but simply bad economics.

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Growth figures, for example, show economic activity per capita growing from around 90% of the Scottish figure in 1998 to 96% in 2019. Even considering the challenges of the pandemic – particularly its impact upon tourism – the economy of the Highlands has closed the gap with the national average over the longer-term.

The economy is increasingly vibrant and dynamic. Plans are being developed, for example, for the single largest private infrastructure project in decades with SSE’s £1.5 billion hydro scheme at Coire Glas near Invergarry.

The establishment of the Inverness Green Freeport, and new investment at Kishorn, has the potential to open new opportunities for a share of oil and gas decommissioning and offshore renewables contracts. Fort William, meanwhile, is home to the UK’s largest sawmill and its largest aquaculture business. The town’s aluminium smelter – the last in the UK – also has plans for a major expansion.

From the North Coast 500 to the Isle of Skye, and paid attractions such as Urquhart Castle and Nevis Range, the region’s tourist sites are posting record visitor numbers. A shift to quality and a distinctive brand identity is paying dividends for many of the region’s food and drink, arts and crafts, and textile businesses – many of which are family-owned and embedded within local communities.

But the region does face challenges. Some of these are familiar, from higher rates of poverty, unreliable connectivity, challenges over land ownership, and higher day-to-day operating costs. Others, such as pockets of over-tourism and acute environmental considerations, are more recent.

Investment in manufacturing and in traditional sectors such as timber is increasingly constrained by the region’s infrastructure. A single-file rail line still exists on much of the Glasgow to Fort William or Inverness routes, diverting transportation onto roads and high-polluting lorries.

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Perhaps the biggest challenge, and in sharp contrast to the policy prescription of 60 years ago, is the need to induce movements of labour into the area. The average age now tops 47 across the Highlands local authority area, and is even higher in places like the Western Isles. In Glasgow, the median age is in the mid-30s.

On the one hand, surveys point to a greater number of young people wanting to remain within the Highlands. Residents typically report greater life satisfaction than the national average. But on the other, there are growing labour shortages due, in part, to a lack of affordable accommodation. New housing developments planned in places like Fort William and Portree should help mitigate some local pressure but, even then, demand is running far ahead of investment.

The notion of the Highlands being “on Scotland’s conscience” or “a problem” has been consigned to the archives. Instead, the sense is increasingly of a region of sustainable, economic opportunity. But one where a step change in investment, a change in perception, and continued empowerment of local decision-making would go a long way.

Graeme Roy is professor of economics at the University of Glasgow’s Adam Smith Business School and chairs the Scottish Fiscal Commission