Wednesday, April 4, 2012

Trend Analysis: Globalization and the Scottish Economy

The paper “Trend Analysis: Globalization and the Scottish Economy” is one of the papers in the “The Futures Project”, a series on trends analysis that attempts to identify some key trends that are likely to have an impact on Scotland, along with some of the factors likely to influence those trends. The paper recognizes the trends and its drivers, followed by the factors affecting the drivers of change. The paper then discusses the trends’ implications to Scotland.

The paper recognizes two main trends:
Trend 1: Growing interconnectedness - market opportunities and greater competition
Trend 2: Pressure on natural resources and primary commodities

Growing interconnectedness – market opportunities and greater competition
Factors affecting drivers of change
Driver 1: Closer economic ties
Driver 2: Accelerating technological change & knowledge economy
Driver 3: Political integration

According to the paper, the growing interdependence of counties and people is a crucial trend for Scotland and will continue drive structural changes in the Scottish economy. The increasing interdependence is driven by emergence of new competitors like China and India. The process will open up new avenues for trade and investment flows for Scotland but also accelerate the process of market change as new and more efficient competitors gain market share. This process of globalization underscores the crucial importance for Scottish business to constantly innovate and to firmly establish the capacity to react flexibly to changes in the market environment.

Likely implications for Scotland
Despite increasing pressures, more developed countries are, on the whole, well prepared to meet the competitive challenge from emerging countries.  High skill levels and sophisticated capital equipment lead to greater productivity and income levels than, for example, China and India could be able to achieve in the foreseeable future.  The rise of these countries to economic superpowers will put continuing pressure on the Scottish economy as they move towards industries that are ever more skill-intensive.  However, whilst the emergence of India and China will present new challenges, the scope for new opportunities in trade should not be underestimated, creating new export markets for Scotland and also a source of cheaper inputs.  The overall benefits of greater competition and gains in efficiency should benefit the world economy as a whole.

Trend 2: Pressure on natural resources and primary commodities
 Factors affecting drivers of change :
Driver 1: Rising global energy and raw material demand

The demand for food, fresh water, timber, fiber and fuel is growing rapidly, putting pressure on available resources.  Resources of fossil fuels are finite and will be subject to increasing demand as a consequence of the growing energy demands of expanding developing countries such as China and India and the continued growth of the developed world. The impact of China’s extraordinary growth can already be felt by Scottish businesses in the markets for raw materials; energy prices in particular have been rising and are currently high. In the coming decades, the scarcity and price of energy supplies could be a problem common to the developed and the developing world and, in the near-term the dependence on oil of the developed world will be the greater.

Likely implications for Scotland
Growing global demand for energy and raw material supplies will raise price pressures and put strain on the energy and primary material-intensive Scottish industries, especially when the US dollar regains strength. In the quest for alternative sources of energy, Scotland is well placed to reap considerable returns from further investment in renewable energy production and research.  


The paper “Trend Analysis: Globalization and the Scottish Economy” written in 2006 discusses the macro economic trends and impacts on the Scottish Economy with an outlook of 20 years. Some of the major trends uncovered are the growing interconnectedness between countries that is causing closer economic & political ties, and accelerating technology. The paper also recognizes the increasing demand for finite resources and its impact on Scotland. 


  1. What impacts will this have for the intelligence community? I agree that Scotland will have to further invest in renewable energy, much like every other country - but I don't know whether high skill levels and sophisticated capital equipment will continue to maintain countries economic positions.

  2. I agree with you. You have given us a great deal of information. Excellent work you have done for sharing with everyone
    Thanks for sharing. i really appreciate it that you shared with us such a informative post..