Scottish Independence: Levers of Innovation Policy for Economic Development

“A can of worms but someone had to open it, less they die and fail to eat the rotting forbidden fruit to make the compost that the world so desperately needs upon which to grow the fields of prosperity of tomorrow”  -Clouser 

Through a myriad of conversations I’ve had over the last 10+ years concerning the prospects of an independent Scotland and its benefits and drawbacks, I’ve discovered the boundaries of thinking on the issue. I’ve often referred to the potential for “intelligent innovation policy” or, perhaps more buzzwordy, “smart innovation policy”. However, this notion is often lost on my listeners (or, perhaps in many cases, non-listeners as the issue of independence is a politically charged idea that raises the ire of many a man and woman).  If I have the time and inclination, I can spell out these different areas of policy where change can be effected. However, often I am not able to do so.  Moreover, in reading through the white paper on Scottish Independence contributed by the Scottish Nationalist Party (SNP), the news on the matter, and listening to the rhetoric on both the “Yes” and “No” sides of the campaign, I have found it dampening that innovation policy is not being addressed more directly, either pro or con. It seems to be somewhat absent, although muddled in an about some of the logic put forth by the SNP.

Thus this writing will lay out the basic levers of innovation policy for economic development for a renewed and independent state in the North.  It will form the basis for a series of blog articles around each lever where we will thus explore them in a deeper manner. Having spent 7+ years in Scotland as a MSc/PhD student at the University of Edinburgh who researched entrepreneurship, innovation, university and public policy, I am not only qualified to comment on this matter, but also feel obligated to do so as the Scottish Government, through its economic development arm Scottish Enterprise, helped fund my studies. In addition, I was fortunate enough to have served for 6+ years with the Edinburgh-Stanford Link as an Associate, and was intimately involved in entrepreneurship learning for both students of the University of Edinburgh as well as executives of Scottish software companies. I’ve lived in Scotland on and off since 1990, when I was fortunate to first visit just after my undergraduate studies and worked there under the BUNAC programme.  It was in that year that I first became aware of the possibility of independence, and have followed the issue since before devolution.

In keeping with the theme of this site The Academic Entrepreneur, I will be addressing levers of innovation policy (both university and public) that are aligned with the knowledge economy, and deal with the potential of exploiting knowledge, creativity and innovation. An underlying assumption in particular that should be expressed is that the creation and growth of new ventures arising from a knowledge base will be good for an economy, and can lay the path for world leadership and economic benefits for all eventually. An economy that is developing and exporting intellectual products and services could thrive beyond current recognition. Moreover, there is little choice.  While manufacturing, agriculture and tourism all play an important role for diversified economy, none of these are going to lead Scotland back into the forefront of leadership in the world. Nay, her real promise is in her educational institutions, both lower and higher. In some regards this may come full circle, as it was Scotland’s ability to educate the masses and form a literate public before others in Europe that paved the road for leadership in the Europe some long years ago. Indeed for a small country of roughly 5 million people, Scotland lays claim to 15  world class universities http://en.wikipedia.org/wiki/List_of_universities_in_Scotland, including the University of Edinburgh, recently ranked 17th in the world by QS http://www.topuniversities.com/university-rankings. The University is the UK’s most productive in terms of academic entrepreneurship measured by spin-outs and start-ups. In competitive strategy’ we find the Strenght, Weaknesses, Opportunitites and Threats (SWOT) analysis http://www.mplans.com/articles/how-to-perform-a-swot-analysis/ that teaches us that  an organization should play to its strengths, avoid its weaknesses, exploit opportunities and turn threats into opportunities.  Scotland’s universities are a key strength to be played, enhanced, and exploited, much more so than the oil fields of the North Sea.  The opportunity to drill for riches far exceeding the value of the commodity in the seabed exists. Knowledge is the diamond in the rough for Scotland. Unlike petroleum, it is unlimited in supply as well, and can be imported, mined, and exploited; knowledge creates more knowledge for it spills over if its encouraged to do so through the infrastructure of the Third Wave.

My argument is that there are particular areas of innovation policy that are controlled by Westminster and that impede creativity and innovation, and the further development of a knowledge economy.  As is accepted by many, this is because London essentially drives the formation of policy in Westminster that effects the rest of the UK negatively. It’s good for London of course, but we have to remember that London’s main business driver is the financial services segment. Moreover, London has its own unique social and infrastructure concerns, and is a massive 3 story spread of urbanity.

The issue of the move towards an independent Scotland is indeed complex and such an event, should it occur, would be dynamic in terms of social, political and economic change. There are plenty of arguments from the “No” side regarding budgets and finance,  and the economic downside of independence. My point however is that even if some of these projections are true, it may not matter, because an innovation policy and strategy that is well planned and executed would move the economy far beyond where it currently produces in terms of gross domestic product (GDP).  It is up to Scotland’s leadership, and the SNP at this time therefore, to think through and plan out an extremely compelling and forward-thinking innovation policy. Through my writings here I will lay out a series of ideas, policies and changes to the existing status quo that I believe would make such a difference. Of course, from there, it’s up to the politicians, and even more importantly, the people, to embrace them or modify them against the existing.

 

 

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Would innovation policy bring Christmas to Scotland or is such prosperity limited to Germany in the European Union? 

Depending on how we categorize these the levers of innovation policy for Scotland, there appear to be about as many as there are Scottish Universities.  Below you will find them listed, and these will form the basis of further writings over the coming months as we move towards the Independence Vote on September 18th, 2014.

  • University Policy.  How universities are administered, and what policies they are governed by. Also, this policy area concerns universities themselves, and offers specific areas of change for the increasing of innovation.  An area ripe for change, it is also an extensive one that I could write a book about, but will not. Rather, I’ll offer a few specific policies that can make a difference.  Scottish universities are recognized in the white paper on independence as a key area for innovation.
  • Research Policy. Another very broad area related to university policy and intellectual property policy. Again, I will offer some specific instances and suggestions for policy changes and creation to drive innovation.
  • Immigration Policy.  No doubt that this is the second greatest lever for innovation for Scotland. Unlike university and research policy, it will be much easier to change upon independence, and affords the greatest opportunity for effecting rapid change and an increase of the innovation and entrepreneurial capacity of the nation-state. This is one issue that is not going to change if it’s up to Westminster. In fact, immigration policy is tightening, and will continue to tighten and get even more stringent in the future, whether it be in England, in Scotland or both, should Scotland not achieve independence. In my mind, this is a the biggest choke on innovation, over and above any that financial, tax or university policy are currently gripping.  This is an area addressed by the white paper on independence. While there is not a whole lot of detail on it, I’ll be proposing what might be perceived as even a more liberal immigration policy than currently offered up.
  • Entrepreneurial Policy.  Here in particular I speak to those non-tax, immigration or financial policies that can effect the supply of entrepreneurs.  For example, “Entrepreneur Attraction Programmes” (EAPs) such as those currently offered by South American governments such as Chile, Peru and Brazil. (Brazil has set the new benchmark for such programmes).  Such efforts result in the importation of brains and entrepreneurial capacity, as well as capital. This policy also bleeds over into programmes for supporting entrepreneurs. Many such do already exist and are offered by Scottish Enterprise. However, my particular focus will be on “high impact” programmes and those for mining knowledge and the creation of new technologies and ventures through academic entrepreneurship.
  • Intellectual Property (IP) Policy. Definitely a controversial one but an opportunity for Scotland to really innovate through thinking out of the box and striking out IP policy that is innovation-friendly and entrepreneur-friendly. I am going to ask Mike Masnick from Techdirt  http://www.techdirt.com/ to chime in here and create the basis of an IP policy from the ground-up.  I’ll welcome input from others in this regard as well.
  • Financial Policy.   In this area I am focusing on policies surrounding the issuance equity and debt, and the legal structures of firms. In particular as well I’ll address crowdfunding and alternative financing vehicles.  Also, the issue of public equity markets, including the potential for creating a new world leader in this regard, is an option that should be considered.   A crucially important component of the knowledge economy is the availability of entrepreneurial finance. Here I’ll be exploring policies and programmes effecting business angel investors and networks, and venture capitalists, as well as public markets.
  • Incubation Policy and Programmes:  This is sort of new category I’ve created specifically for policy and programmes related to incubation of new ventures and projects.  This area covers acceleration and incubation, as well as co-working and spaces for creativity such as makerspaces and hacklabs.
  • Investment Policy. This has to do with how public funds and funds that the government influences are invested. It also concerns the possibility of a Sovereign Nation Fund, perhaps from the harvesting of oil revenues, and how and what this fund is invested.
  • Tax Policy. I am certainly not a tax expert and this is an area where I will touch upon but not dwell deeply. I believe it is often overplayed by conservatives as a focus for its such an easy lever to pull. Tax policy can help, and is a good thing, but it’s not the be all, end all that will lead to an innovative, entrepreneurial economy.
  • Communications Policy:  How communications networks, including internet, wireless and mobile, are treated and regulated.
  • Trade Policy:  Policies surrounding trade including import, export, trade, tariffs, and so forth.
  • Legal Policy. Another broad area. This has to do with the regulation of legal firms; also, of competition. Especially interesting here is the “non-compete” agreement that Mike Masnick has identified as being a major instigator of innovation through its non-enforcement in California.
  • Currency. Another area for great leaps in innovation. The conversation around currency is stifled in my opinion. Thus I’ll address this as it’s a key area of government policy that is too opportune to pass up and just resort to a two solution alternative: the Pound or the Euro? Instead the exploration should be towards the creation of a new currency that will set the standard for the world in terms of how it is administered. Such a currency might be asset-backed, commodity-backed, electronic, all three or none. The point is that the opportunity to create a new, smart currency should not be missed.
  • The European Union.  Also a major issue of policy where there is a simple two-sided argument currently raging: “The EU or Not”? How easy will it be to join?  Rather the conversation might better be hinged around the question of whether or not the EU’s policies are good for a new innovation policy in Scotland. A cost-benefit analysis is indeed needed, but first we have to recognize the potential of policy changes for innovation.

The above will give us a good start to the discussion on innovation policy levers for a newly independent Scotland. My goal is to take these together and present a case that shows the possibilities. In the short time that I have, I will bring in as much from both the literature, as well as from “antilogs” and “analogs” as I can muster.

My goal is also to involve other thinkers, such as my PhD Advisor Henry Etzkowtiz. One of his contentions, for example, is that Scotland should be redefined geographically and include the region from Hadrian’s Wall to the North.  An interesting value proposition as the population of Scotland would thus be increased to 8 million; and lay ownership to another major city, Newcastle, also known as Geordieland. In his findings, Westminster more or less ignores the Northeast of England anyway, and the region would be better off as a part of Scotland. Perhaps this is a region for future annexation as its not a part of the current SNP strategy currently (granted, such would take even more maneuvering politcally and is just not feasible or realistic at the current time). However, in principal, this makes a ton of sense, to extend the boundaries of Scotland to Hadrian’s wall. Of course, it would be up to the 3 million people who live north of the Wall to decide for themselves whether or not to join the new nation-state of Scotland.

Another chap that I would like to hear from on the issue of education is Ewan McIntosh of NoTosh http://notosh.com/who-we-are/ewan-mcintosh/. His views on innovation and the digital era would also be appreciated. Mike Masnick of Techdirt as mentioned above, whom visited us in Scotland a few years ago through the Edinburgh-Stanford Link programme is another guest that I am interested in getting involved in this conversation. Please do suggest others as well, readers.

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