03 October 2023

Building research partnerships to bring rural expertise and an international perspective

New OECD report

Innovation knows no geographical boundaries, yet policies do, writes Michelle Marshalian, Economist and Project Manager at the Organization for Economic Co-operation and Development (OECD). In rural Scotland, a not-so-quiet revolution is underway, fuelled by a strong collaboration between the OECD, researchers at the National Innovation Centre for Rural Enterprise (NICRE), and in partnership with Scottish Enterprise, Highlands and Islands Enterprise and South of Scotland Enterprise.

Last week the OECD launched a new report entitled “Enhancing Rural Innovation in Scotland, UK” which is the fruit of this collaboration. The report brings new perspectives in the timely discussions on closing geographical divides, the UK Levelling Up agenda, and the first and newly-adopted Scottish National Innovation Strategy, 2023-2033. In this blog post, I'll explore the landscape of innovation in rural Scotland, the work undertaken by the OECD in collaboration with NICRE, and its relevance in the context of the new innovation agenda. [Photo credit: Raymond Hosie/HIE]

Understanding the drivers of rural innovation in Scotland

Scotland’s rural areas account for a sizeable share of the population and are a vital part of the country’s future. Over one-third (36%) of the population of Scotland live in non-metropolitan regions, resting well above the equivalent average in OECD countries (30%). They also host about a third of firms but employ only 15% of labour.

During the pre-Covid-19 period, almost all change in Scottish productivity growth from 2010 to 2018 was driven by accessible and remote rural areas. Using data from the UK Business Register matched with data from the UK Innovation Survey, the report found that remote regions accounted for 81.6% of the increase in productivity, with accessible rural regions contributing 25%. Urban areas, on the other hand, made, on average, a negative contribution (-6.6%).

Scotland’s rural areas are a bastion of opportunities for bringing new approaches and innovations to market that blend tradition with modernity.

From rural Scotland comes innovation and scale-ups in sustainable agricultural and forestry practices, renewable energy sources, biotech in the pharmaceutical industry, the new applications of circular economy in the entertainment and food and drink sectors, and constantly changing fabric designs that has transformed the traditional tweed fabrication industry into the continued champion of the tweed designs today.

One major advantage for rural Scotland is the role of government support for social innovation, social entrepreneurs and community-led initiatives that have improved well-being in rural areas. It is no wonder that despite falling population rates and increased aging in rural and non-metropolitan areas across the OECD, the trend is slower, and even reversed in some accessible rural areas of Scotland. The share of the population in accessible rural areas grew by 0.84 percentage points from 10.56% of the total population in 2010 to 11.40% of the total population in 2020, whereas it fell on average in OECD countries.

Collaboration with NICRE: A game-changer

One of the key aspects of the work in rural Scotland is research and data analysis. By collecting and analysing data, the OECD was able to identify trends and opportunities in rural areas. However, this data-driven approach that allows policymakers to make informed decisions would not have been possible without the collaboration with NICRE and, in particular, Sara Maioli and Thao Nguyen.

NICRE emerged as a crucial partner in the work of the OECD and Scotland's rural innovation journey. By leveraging this network, the collaboration between the OECD and NICRE, helped ensure that innovation is not just a theoretical concept but a tangible force driving positive change. It is a synergy of global expertise and local knowledge that will continue to support knowledge-based policy advice in the future.

Supporting rural innovators and entrepreneurs

While all rural places are different, they often suffer from challenges related to scale and relative distance to markets.

With a rural lens and using research and policy recommendations drawn from global practices within the context of the OECD’s Enhancing Rural Innovation project, that includes the United States, Canada, Switzerland and Japan, the findings of the report on innovation in rural Scotland underline the importance of:

  • Going beyond the science and tech framework in innovation policy to focus on a wholistic approach including social innovation, public sector skills for innovation, and supporting entrepreneurial eco-system for innovation;
  • Continued vertical and horizontal co-ordination to improve innovation systems, for example, through cross-departmental initiatives, such as the Rural Economy Action Group; and
  • Improving public service delivery through, bottom-up approaches and more experimentation initiatives for entrepreneurs.

As a result, this project and its many partners have contributed to the evidence-based background documentation on the sub-national dimension of the new innovation strategy for Scotland.

Going forward

After many deliberations and consultations, the Scottish Government approved and published the new Innovation Strategy in June 2023. It promises to deliver support for innovation tailored to the needs of the Scottish economy. While it suggests that place plays a role, it still focuses on high-tech innovation activities, overlooking the diversified nature of rural communities. Engaging with the regional enterprise agencies in Scotland will be critical for the implementation of the strategy to reduce regional inequalities.

As this partnership continues to evolve and expand, the OECD and NICRE are looking forward to supporting governments in Scotland and across the UK in better understanding and harnessing the opportunity for innovation, growth and well-being by investing in and understanding our rural areas.