Developing a knowledge economy in Scotland: lessons from the operation of the LINK programme

The devolution settlement has produced a division of powers between the Scottish Parliament and Westminster that cuts across the boundaries of certain key policy areas. One such area is the development of the knowledge-based economy. Here, powers on trade and industry, finance, the economy, and employment are reserved to Westminster. Relevant powers that are devolved are education and enterprise. Given this division, it is appropriate to ask how effectively the government's strategy to create and develop a knowledge-based economy in Scotland is operating, and whether there is effective co-ordination between reserved and devolved powers in this area. This article examines this question by studying the operation of one of the government's main instruments for the development of the knowledge economy, namely the LINK programme. Our findings are that Scottish industry's involvement in the LINK programme is low, both in terms of what might be expected given the size of Scotland's high and medium high technology sectors, and in terms of its university participation in the programme. A number of potential reasons for this low participation are put forward here. It is clear that there are a number of contributory factors, of which the main is the low number of firms in Scotland carrying out R&D. However, we suggest that the current division of powers between the two governments does not necessarily assist the development of a knowledge economy in Scotland, and that changes are required to improve the situation. Some possible changes are considered.