The Significance of Identifying Industrial clusters The Case of Scotland

Industrial clustering policy is now an integral part of economic development planning in most advanced economies. However, there have been concerns in some quarters over the ability of an industrial cluster-based development strategy to deliver its promised economic benefits and this has been increasingly been blamed on the failure by governments to identify industrial clusters. In a study published in 2001, the DTI identified clusters across the UK based on the comparative scale and significance of industrial sectors. The study identified thirteen industrial clusters in Scotland. However the clusters identified are not a homogeneous set and they seem to vary in terms of their geographic concentration within Scotland. This paper examines the spatial distribution of industries within Scotland, thereby identifying more localised clusters. The study follows as closely as possible the DTI methodology which was used to identify such concentrations of economic activity with particular attention directed towards the thirteen clusters identified by the DTI. The paper concludes with some remarks of the general problem of identifying the existence of industrial clusters.

Currency Issues and Options for an Independent Scotland

In this paper we take on the role of a ‘virtual consultant’ to a potentially independent Scotland. What should the exchange rate regime of an independent Scotland look like? We argue that the current proposal of the Scottish government to remain part of the sterling zone is doomed to failure, both because it falls short of a full political and monetary union and because it fails to recognize the reality of the Scottish economy post independence. We argue that the only tenable solution for an independent Scotland is to have a separate currency and for this currency to have some flexibility against Scotland’s main trading partners. One option offered here is managed float or crawl against a basket of currencies.