аЯрЁБс>ўџ 68ўџџџ5џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџьЅСq` №ПЁbjbjqPqP .&::ЁџџџџџџЄ,tttt € , ˜˜˜˜˜˜˜˜™ › › › › › › $ hˆ–П 1 ˜˜1 1 П ˜˜д I I I 1 .˜˜™ I 1 ™ I I I ˜Œ №Сyѓ‹“Щt_ .I ™ ъ 0 I  ^I I P˜ЖЬI ‚ Є& ˜˜˜П П ы ^˜˜˜ 1 1 1 1 ,,,$P$,,,P,,,џџџџ How the Universities See the Way Ahead Jim Cuthbert Margaret Cuthbert February 2009 On 12th February, Universities Scotland published a report “What was / What next?” on what they saw as the correct economic strategy for Scotland. Universities Scotland is an umbrella group which speaks on behalf of the universities in Scotland. A group of 11 economists, led by the Principal of Heriot Watt, was consulted in preparing the report: we were two of those economists. Here we summarise the main conclusions of the report, and more importantly, as the report was very much work-in-progress, we set out some of the further work which we ourselves believe is necessary to complement the report. Two major conclusions of the report were as follows. First, that the most important factors available to advanced economies to increase productivity are high-level skills and the ability to produce higher-level innovation. These are also crucial in enabling the deployment of more advanced technology. Second, that marginal reductions in business costs could even inhibit productivity by subsidising for short periods companies which are not sufficiently productive to compete. The inference that the report drew from this can be paraphrased as follows: we have to develop new industries if we are to compete: to do that we must innovate: and to encourage innovation, the highest returns from the investment of new resources are likely to come from the higher education sector. This report was not greeted with enthusiasm by the Scottish government, whose emphasis has tended to be on business tax reduction and investment in vocational skills. As we noted, we regard the report as very much a work-in-progress: here are a number of points which we think it is important to address as this work is taken forward. We should stress that what follows are our own opinions, and not necessarily those of Universities Scotland. First of all, the impression was given in much of the comment prompted by the report that the report somehow downplayed the importance of other educational sectors and other levels of skills, at the expense of the university sector. The report does indeed argue that the returns from additional investment in education are likely to be greater in the higher education sector: particularly in the sense that some of the returns in the form of innovation opportunities are likely to be unique. But all sectors of the education system must be performing well. For example, recent reports on primary and secondary school education in Scotland suggest that we are not performing as well as we could be, or as well as other developed economies that we regard as our competitors. Clearly attention needs to be paid to this, whether it involves new investment, or increasing the effectiveness of existing resources. Secondly, what the Universities Scotland report does not do is to look inward at how well the university sector itself is performing. This is not surprising as Universities Scotland is a pressure group and does not have any remit from its members, the universities, to examine the sector itself. As complete outsiders to the universities sector, it is easier for us to make the point that there are very good grounds for embarking upon a thorough review of the whole higher education sector. The universities sector is expected to fulfil a whole range of disparate functions: it is expected to teach both in breadth, approaching 50% of young people, and in depth, up to the very frontiers of knowledge. It is also expected to do research, both advanced blue skies research, and more applied near market research. It is expected to commercialise its research, either selling patents or spinning out companies: and it is expected to collaborate with existing businesses. All of these expectations have been heaped upon universities in an unplanned and incremental fashion. There needs to be a thorough review to see whether we have actually got the priorities right for Scotland, and also to see whether the existing structure, going back in part to accidents of medieval times, is the appropriate one to best deliver what we expect from them today. Thirdly, if we are to grow our economy successfully, we need to supplement the contribution of the universities sector with an entirely changed attitude to support for business, particularly new businesses. There has been a very depressing record of promising new hi-tech spin-offs either failing outright, or, if they show signs of succeeding, being bought over, and effectively lost to Scotland. This is a difficult problem, which is not unique to Scotland. But Scotland could do a lot to help its new hi-tech start-ups, as other countries do, by, for example, focusing state support on the vital near market stage, as new products move from prototypes to manufacture. We need to entirely change the defeatist attitude that advanced economies cannot manufacture: successful economies like Germany and Sweden do maintain, and indeed, largely depend on, successful manufacturing sectors. And, as other economies in the EU do much more successfully than the UK, we need to exploit all the available wriggle room within the rules for state aid to help young hi-tech companies. Finally, it would be wrong to interpret the report as implying that the future for Scotland lies entirely in the development of completely new blue sky industries, developing out of ground breaking research. There hopefully will indeed be some of these. But we should be looking for new opportunities in areas where we have some inherent natural advantage – like energy, both old fashioned oil and coal, and renewables. A good example of the unexpected synergies which can arise from existing industries is the development of the electronics industry in Finland: this started off with the need for communication devices to help those working in the country’s vast forests. We don’t know what the future will look like: but it will grow out of the present: and it is up to us to determine how we develop. '45[]В в  P X В Г Ж ј љ  / G H K ˜ œ Ё Д р с э    ‘ М Н ф cdA2ЭЮ~€Ђш{|ЏГ Ÿ ЁїѓяѓчѓуѓуѓуѓмимимимимбмбмЦОЦОЦмиуиКЖКиКВКВЎВЎЊЎЊЎЊЎЊІЊІЖІЊВhГN8hehЂi`h“d hЂhсKlhњMœB*phhњMœhѓ=B*ph hњMœhњMœhњMœ hњMœhѓ=hѓ=h”!hh”!hH*hMшh”!hh”!hh”!h5;'(5GUVГ ‘ Н dyЮI| ЁїяяяяъъъъъъъъъъъъgdњMœ$a$gd”!h$a$gd”!hЁў,1hА‚. 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