An evaluation of the impact of Scottish Enterprise on the Scottish and rest of the UK economies: 2001/2002

The evaluation attempts to quantify the impacts of the activities of Scottish Enterprise (SE) on the Scottish economy and the economy of the rest of the UK (RUK) during the operating year 2001/02.

Existing estimates of the direct employment effects of SE policies were used to model the total effects on Scottish and RUK employment, output, competitiveness and productivity. This incorporated the impact on the sectors directly affected by SE policy plus the knock on multiplier, competitiveness and labour market displacement effects on all other sectors. The impacts of Scottish Enterprise activity were estimated using two separate models: a Scotland-only single region model; and an inter-regional Scotland/RUK model.

The key impacts of SE activity on the Scottish economy were identified as follows: total employment generated was between 26,000 and 31,000, with a multiplier value of between 1.71 and 1.93; investment in tourism services yielded the highest multiplier effect of 3.16; in general, the supply-side policies had higher employment multipliers than demand-side policies; overall increase in GDP for the Scottish economy was estimated at 2.5%; ‘Growing Business’ was the theme that made the largest contribution by a number of measures; unemployment fell by around 13,000; and overall costs-per-job to SE averaged at around £12,000. The key impacts of SE activity on the RUK economy were identified as follows: direct SE policy successfully created indirect employment elsewhere in the economy, although this was more likely to occur in Scotland than in the rest of the UK; overall GDP increase in RUK estimated at 0.0018% to 0.0019%; ‘Growing Business’ was the theme that made the largest contribution to the RUK as well as the Scottish economy; competitiveness impacts differed by SE policy; productivity impacts were positive but small; unemployment dropped by between 22,000 and 26,000; the balance of payments was improved overall; given certain assumptions, the additional net income directly and indirectly generated by the policies of SE were less than the cost of the policies themselves; and there were positive spillover effects as the RUK budget increased.

The report makes recommendations on improvements to future evaluation techniques.