Innovation is the key to the future, so Scotland is standing strong. With good transport links, a buoyant technology sector, high standards of education and a proactive economic development agency, its reputation as a place that encourages innovation and facilities is attracting even more inward investors and domestic entrepreneurs to establish a base in the country.

“We’re delighted to win fDi’s Region of the Future award,” says Brian Shaw, director of field operations at Scottish Development International (SDI – the joint international arm of the Scottish Executive and Scottish Enterprise). “Scotland is a great place to live and work, and this endorses the quality of what Scotland has to offer.”

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Investment

The country is committed to long-term development and this is helping it to maintain a world-leading place in some of the newest and fastest growing business sectors. In 2002, plans were announced to turn Scotland into a world leader in the priority growth industries of energy, life sciences and communications technology/digital media.

In turn, this has led to Scottish Enterprise, the country’s main economic development agency, committing Ł450m ($804m) in funding to three intermediary technology institutes that specialise in one of the three priority fields of scientific research. These sectors of research are based in Aberdeen, Dundee and Glasgow. With the innovation created through the institutes, at least 75 spin-off companies could be launched in the first 10 years. Added to this, the centres could act as catalysts for the creation and expansion of new high-tech companies throughout Scotland; encourage further investment from knowledge and high skill-based companies; and develop a strong workforce with both business and academic skills.

To boost innovation further, an EU approved funding scheme was recently launched in Scotland supporting research and development (R&D). The scheme, R+D Plus, has been created to incentivise further crucial R&D investment by larger companies in Scotland and can offer 25% of eligible programme costs where applicants meet the criteria.

Major cities throughout the country are benefiting from this commitment to high-tech growth industries. Glasgow was recently named the world’s Intelligent Community of the Year. The title was awarded by New York-based Intelligent Community Forum, a non-profit think-tank that researches the impact of broadband and information technology on economic growth at a local level. Glasgow has developed 100% digital telecoms at a competitive price and will be one of the first European cities going live with 3G technology.

Meanwhile in Edinburgh, the Edinburgh Science Triangle has been established to promote excellence in technology, medicine, engineering, communications and life sciences. As home to more than 3300 world-class researchers and with the potential for 15,000 new high-value research jobs, this could make it one of the top 10 European areas of science and technology investment.

Dundee, the winner of Best FDI Promotion category in fDi’s European Cities and Regions of the Future awards, is also gaining international recognition in the areas of biotechnology, digital media and life sciences. Its projects – such as the Ł20m, 25-acre Digital Media Park, Centre for Inter Disciplinary Research, Wellcome Biocentre and 30-year plan to reconnect the city to its waterfront – caught the judges’ attention.

Academic excellence

Scotland has a reputation for high quality graduates with a global focus. Its 13 universities have links with institutions overseas, including the Edinburgh University-Stanford link. This five-year collaborative programme, part-funded by Scottish Enterprise, aims to establish Scotland as a global leader in the commercial development of language technology and boost the country’s position as a centre for R&D.

Scotland’s particular strengths in the science, technology and medical fields have been a major benefit to many international companies with bases in the country. Its graduates are respected worldwide for their commercial sense and entrepreneurial spirit, which is being fostered throughout the region’s institutes and universities. With strong links between the business community and universities, companies have access to high calibre graduates – while having the advantage of early access to world-leading technology, designed to give them a competitive lead.

Feeding into business

Partnerships between academia and business are fuelling major developments throughout Scotland. Today, Scottish Enterprise estimates that new technology, together with education, tourism, financial and business services and health, accounts for 70% of the country’s gross domestic product.

Scotland is a world leader in some of the world’s greatest growth industries. More than 20,000 people work in the region’s biotechnology industry alone, making it one of the most successful in Europe. Growth in this industry is about 30% a year and this has been helped by Scottish Enterprise’s involvement in marketing the Scottish Biotech network worldwide. “This is helping both our company to grow and the industry as a whole to develop,” says Kevin Cook, director of operations at Rhodia Pharmasolutions, a provider of products and services to the pharmaceutical industry.

The optoelectronics industry is also experiencing major growth. It is estimated that in Scotland alone the sector is valued at Ł600m, and involves 60 companies employing 5000 highly skilled people, many with PhDs.

Scotland is a world-leading developer and manufacturer of semiconductors. Major global players with bases in the country include Motorola and National Semiconductor. Advanced system-on-chip semiconductor devices are designed at the Alba Centre, in Silicon Glen, near Livingston.

The financial sector has also been attracted to the country: Scotland is now ranked as the sixth biggest financial centre in Europe, with Ł351bn in funds managed. The energy sector remains important, with an estimated 27,000 people working in the North Sea oil and gas extraction industries. And heritage, tradition and natural beauty work together to make Scotland an attractive place for people to live, while providing yet another important source of revenue. Tourism pumps Ł2.47bn into the Scottish economy each year.

Opportunity

Scotland is an attractive place to do business for inward investors and domestic entrepreneurs alike. In the year to March 2004, Scottish Development International and its partners helped to attract 74 inward investment projects to the country.

Like businesses that were established in the country before them, these companies were attracted by the opportunities that a country at the centre of global innovation could provide.

National Semiconductor (NSC) (UK) Ltd originally set up base in Scotland in the 1970s because it wanted to be in Europe and close to its automotive and big mobile telecoms customers. “Scotland had – and continues to have – high skills levels in terms of design and manufacturing engineers,” says Gerry Edwards, vice-president of operations.

Quintiles, a pharmaceutical development company with headquarters in the US, has benefited from its position in Scotland. Today, it boats six sites with 1300 staff, compared with 190 staff on one site in 1995. “This expansion has enabled us to broaden our service offering to provide full-service pharmaceutical development services, including operating a multi-lingual call centre and a shared service centre for the whole of the UK and Europe from Scotland,” says Jamie Macdonald, general manager at Quintiles Scotland.

Domestic businesses are also benefiting from significant growth in high tech industries. In November 2003, 262,545 private sector enterprises operated in Scotland. One of these, Cumbernauld-based Nallatech, a developer of Field Programmable Gate Array (FPGA) systems, has moved from being a one-man business to a company that employs 60 staff from offices in the UK and the US. The company has grown thanks, in part, to the assistance of organisations such as Scottish Enterprise. In the early years, it received funding and training, which enabled it to develop and build on the latest ideas. With help from the agency, it also successfully opened operations in the US.

Global economics

Although the global electronics business has suffered a downturn, businesses in Scotland have ridden out the storm. “The decline in high-tech opportunities has been quite traumatic for the semiconductor industry,” says Mr Edwards. “However, Scottish Enterprise has helped us to look at our markets and examine how we – as inward investors – can leverage what we do in Scotland. Scottish Enterprise’s support for companies like ours enables us to change our capabilities or business focus, and to realign, readjust and re-equip ourselves for changes in the market. We see the gaps in our business strategy and they help us plug those gaps, as well as giving guidance on how to deal with problems we may be facing.”

Logistics

The nation’s transport infrastructure remains a strong driving force for businesses to grow. Its four major airports, the world’s busiest heliport and a good rail and road infrastructure make it a great location for businesses demanding good logistics. With the expansion of airports and the development of new air routes, such as the Aberdeen to Copenhagen service that began in August 2004, and daily direct flights to the US, Scotland is without a doubt a global player with long-term opportunities to offer the business community.