« Previous | Contents | Next »
Listen
measuring Scotland's progress towards A SMART, SUCCESSFUL SCOTLAND
global success in key industries
LEAD INDICATOR
5A - PRODUCTIVITY LEVELS IN SCOTTISH INDUSTRY
Why this measure?
GDP per hour worked is a measure of the value of labour and capital in the production process. GDP per capita is a useful measure of economic welfare, but it doesn't indicate how many worker hours are involved in GDP creation. Comparing GDP per hour worked across countries allows a relative measure of the labour intensity involved in wealth creation. By using an index (with the UK set equal to 100) it is possible to see if those countries with high GDP per head are using high value labour inputs. An alternative measure would have been GDP per employee. A limitation of this measure is that it does not take account of variations between countries of the number of hours worked.
How does Scotland perform?
GDP per hour worked (1999)
Data from the OECD for this measure are experimental currently and limited in range, but they do allow Scotland to be compared against some of the comparator countries. Scotland ranks fractionally higher than the UK at 100.9, with the USA and Germany performing considerably better at 127.7 and 122.8 respectively. The surprise is the poor performance of Japan at 94.2. On this basis it may be tentatively concluded that Scotland would lie in the third quartile along with the UK.
What does this mean for Scotland?
The data on GDP per head (Indicator 1) indicated that Scotland performed less well than both the UK and Japan. By this measure this position is reversed. GDP per hour worked will reflect the capital intensity of production - the more capital available to employees the more will be produced per hour worked. High levels of GDP per hour found in the USA and Germany do indicate that Scotland has scope for considerable improvement. This improvement may come through increasing the capital available within Scottish businesses, but also through increasing the rate of product and process innovation.
5B - A KNOWLEDGE-BASED INDUSTRIES INDEX
Why this measure?
Knowledge-based industries, 8 such as the electronics and biotechnology sectors, form an important part of the Scottish economy. An index of how these industries are performing is not available currently. Instead the value added 9 (net output) in these sectors from Scotland's Input-Output tables was used as a proxy and compared with information available on a comparable basis for the OECD.
How does Scotland perform?
Share of value added from knowledge-intensive industries (1999)
Scotland is in the first quartile, as it was last year, ranking 6th in a 28-country comparison with 26.5% of value added coming from knowledge-intensive sectors. The first quartile is led by Switzerland with 36% and also includes the UK with 28.1%. This measure is slightly limited in that it does not contain data for the health and education sectors. Though the OECD defines them as knowledge-intensive the coverage of data would have limited the sample available and it would have included only two of the comparison countries.
What does this mean for Scotland?
Scotland performs strongly against its global competitors. Knowledge-based industries represent an important part of the Scottish economy and include many sectors with foreign-owned firms. Evidence suggests that foreign-owned firms have higher productivity levels per worker and greater levels of investment per worker than have indigenous firms.
5C - NUMBER OF NEW GLOBAL/EUROPEAN HQs
Why this measure?
The number of new global or European headquarters gives an indication of the attractiveness of Scotland as a business destination, not only for the production of goods and services, but as a location for business management functions.
How does Scotland perform?
Number of Business Week 1000 ranked companies per million of the population (2002)
There is no measure of the number of new global or European headquarters so instead the number of firms in the Business Week 1000 10 per million of the population is used as a proxy. With five companies - the same number as last year - Scotland ranks below the UK, with the USA as the lead country.
What does this mean for Scotland?
It is difficult to draw too many concrete conclusions from this result. It is certainly the case that the largest firms headquartered in Scotland are of Scottish origin. Since this indicator seeks to measure the development of world-class companies in Scotland it may be assumed that companies that would be included in the Business Week 1000 will have to come from within, rather than start outwith, Scotland.
« Previous | Contents | Next »