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Business Enterprise Research and Development in Scotland 2002
Summary
1. The value of business enterprise research and development (BERD) undertaken in Scotland in 2002 was 640 million, 4.9% of the UK total. R&D expenditure in Scotland has nearly doubled (+95%) in real terms in the 5 years between 1997 and 2002, compared to a real terms increase of 22% in the UK.
2. R&D to develop pharmaceuticals has expanded particularly rapidly in Scotland: the 2002 value of 217 million is nine times higher in real terms than expenditure in 1997.
3. In 2002 R&D expenditure was equivalent to 0.77% of GDP in Scotland and 1.24% of GDP in the UK
4. Enterprises in Scotland spent 390 per employee annually on R&D, barely 60% of the UK figure of 669. However in manufacturing Scottish R&D expenditure per employee amounted to 2,100, much closer to the UK figure of 2,900.
5. Within the UK R&D spending per employee was lowest in the North East area, Yorkshire and the Humber, and Wales. Businesses spent highest on R&D in Eastern, South East, and South West. In Eastern England, spending per employee runs at four times the Scottish level.
6. Business research and development as a percentage of GDP is lower in Scotland than in important competitor countries, though ahead of Italy and at about the same level as Ireland. In 2002 overall EU expenditure was 50% higher than in Scotland, the OECD average was twice as high and in the leading country in the comparison, Sweden, businesses spent a four times higher share of GDP on R&D.
7. When total R&D in Scotland (undertaken by business, government and the higher education sector) is considered the value of R&D in Scotland reached 1,439 million, 7.5% of the UK. R&D represented 1.73% of GDP, nearly reaching the UK share of 1.83%. This is because government establishments and higher education institutions undertake a considerable amount of R&D in Scotland (14% and 13% of the UK total).
8. Four fifths of the R&D undertaken by businesses in Scotland was funded from UK business sources, a higher proportion than in the UK as a whole. Compared to the UK, a relatively small amount of work was outsourced. Despite this, the Scottish R&D services sector (SIC73) performed well and undertook one third of all Scottish business R&D. In the UK, the share of the R&D services sector was a quarter.
9. Nearly two thirds of Scottish BERD supported just three product groups: pharmaceuticals, radio, TV and communications equipment (including electronic components) and precision instruments.
10. Among the main products that attracted R&D in the UK, Scotland was relatively well represented in pharmaceuticals and radio, TV and communications equipment. Scotland was not well represented in R&D for aircraft and cars. Spending on R&D to support services (including computer related services) was also particularly low in Scotland. The small increase since last year may indicate that Scotland is now catching up.
11. Business R&D provided employment for 10,808 people in Scotland, that is 0.7% of the workforce (excluding public sector). Firms spent 25% less per R&D employee in Scotland than in the UK, and 22% less on salaries.
12. Scottish scientists and engineers, and scientific technicians and IT staff, tend to be better qualified than those in the UK as a whole. Together with other labour market data, this shows that in terms of skills and the availability of staff, Scotland is a place as good as or better than the UK as a whole for undertaking R&D.
13. Small firms undertake a larger share of R&D in Scotland (17%) than in the UK (12%). This is due to the fact that R&D for service products is dominated in Scotland by small firms. Medium sized firms are also relatively more important in Scotland than in the UK as a whole.
14. The top 15 enterprise groups (according to UK expenditure) performed very little R&D in Scotland. However these 15 major groups received over half of UK government funding.
15. Though firms which were under 10 years old made up 37% of the group performing R&D, they attracted only 11% of expenditure. In services around half of the firms were young and they produced around half of the R&D.
16. US based firms undertook 54% of Scottish R&D, followed by Scottish based firms (25%). Firms headquartered in the rest of the UK accounted for only 7% of Scottish business R&D expenditure.
17. Half of all Scottish business R&D was undertaken in the local authority areas of West Lothian and Edinburgh City.
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