Economy of Scotland
Encyclopedia
The economy of Scotland is closely linked with the rest of the United Kingdom
Economy of the United Kingdom
The economy of the United Kingdom is the sixth-largest national economy in the world measured by nominal GDP and seventh-largest measured by purchasing power parity , and the third-largest in Europe measured by nominal GDP and second-largest measured by PPP...

 and the wider European Economic Area
European Economic Area
The European Economic Area was established on 1 January 1994 following an agreement between the member states of the European Free Trade Association and the European Community, later the European Union . Specifically, it allows Iceland, Liechtenstein and Norway to participate in the EU's Internal...

. Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 has the second largest GVA per capita of countries in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 after England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

, though it is still lower than the average of the United Kingdom as a whole. Revenue from North Sea oil
North Sea oil
North Sea oil is a mixture of hydrocarbons, comprising liquid oil and natural gas, produced from oil reservoirs beneath the North Sea.In the oil industry, the term "North Sea" often includes areas such as the Norwegian Sea and the area known as "West of Shetland", "the Atlantic Frontier" or "the...

 and Gas is not included in these figures, if it were it would reveal Scotland with a clear surplus.

Scotland was one of the industrial powerhouses of Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

 from the time of the Industrial Revolution
Industrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...

 onwards, being a world leader in manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...

 industries, at the time, which today has left a legacy in the diversity of goods and services which the Scottish economy produces, from textiles, whisky
Whisky
Whisky or whiskey is a type of distilled alcoholic beverage made from fermented grain mash. Different grains are used for different varieties, including barley, malted barley, rye, malted rye, wheat, and corn...

 and shortbread
Shortbread
Shortbread is a type of unleavened biscuit which is traditionally made from one part white sugar, two parts butter, and three parts oatmeal flour. The use of plain white flour is common today, and other ingredients like ground rice or cornflour are sometimes added to alter the texture...

 to aeroengines
Jet engine
A jet engine is a reaction engine that discharges a fast moving jet to generate thrust by jet propulsion and in accordance with Newton's laws of motion. This broad definition of jet engines includes turbojets, turbofans, rockets, ramjets, pulse jets...

, buses, computer software, ships
Shipbuilding
Shipbuilding is the construction of ships and floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roots to before recorded history.Shipbuilding and ship repairs, both...

, avionics
Avionics
Avionics are electronic systems used on aircraft, artificial satellites and spacecraft.Avionic systems include communications, navigation, the display and management of multiple systems and the hundreds of systems that are fitted to aircraft to meet individual roles...

 and microelectronics
Microelectronics
Microelectronics is a subfield of electronics. As the name suggests, microelectronics relates to the study and manufacture of very small electronic components. Usually, but not always, this means micrometre-scale or smaller,. These devices are made from semiconductors...

 to banking, insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

, fund management
Investment management
Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...

 and other related financial services.

In common with most other advanced industrialised economies, Scotland has seen a decline in the importance of the manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...

 industries and primary-based extractive industries. This has, however, been combined with a rise in the service
Tertiary sector of industry
The tertiary sector of the economy is one of the three economic sectors, the others being the secondary sector and the primary sector .The service sector consists of the "soft" parts of the economy, i.e...

 sector of the economy which is now the largest sector in Scotland, with significant rates of growth over the last decade.

The British Pound Sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...

 is the official currency in Scotland, and the central bank of the UK is the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...

 which retains responsibility for the monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...

 of the whole of the United Kingdom.

Scotland has vast potential to capitalise on renewable energies. A key policy of the Scottish Government is to harness, wind, tidal and wave power and sell this environmentally friendly energy to European Union partners.

Overview

After the Industrial Revolution, the Scottish
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 economy concentrated on heavy industry, dominated by the shipbuilding
Shipbuilding
Shipbuilding is the construction of ships and floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roots to before recorded history.Shipbuilding and ship repairs, both...

, coal mining
Coal mining
The goal of coal mining is to obtain coal from the ground. Coal is valued for its energy content, and since the 1880s has been widely used to generate electricity. Steel and cement industries use coal as a fuel for extraction of iron from iron ore and for cement production. In the United States,...

 and steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...

 industries. Scottish participation in the British Empire
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...

 also allowed the Scottish economy to export its output throughout the world. However heavy industry declined in the latter part of the 20th century leading to a remarkable shift in the economy of Scotland towards a technology and service sector based economy. The 1980s saw an economic boom in the Silicon Glen
Silicon Glen
Silicon Glen is a nickname for the high tech sector of Scotland. It is applied to the Central Belt triangle between Dundee, Inverclyde and Edinburgh, which includes Fife, Glasgow and Stirling; although electronics facilities outside this area may also be included in the term. The term has been in...

 corridor between Glasgow
Glasgow
Glasgow is the largest city in Scotland and third most populous in the United Kingdom. The city is situated on the River Clyde in the country's west central lowlands...

 and Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

, with many large technology firms relocating to Scotland. Today the industry employs over 41,000 people. Scottish-based companies have strengths in information systems, defence, electronics, instrumentation and semi-conductors. There is also a dynamic and fast growing electronics design and development industry, based around links between the universities
Education in Scotland
Scotland has a long history of universal provision of public education, and the Scottish education system is distinctly different from the other countries of the United Kingdom...

 and indigenous companies like Wolfson
Wolfson Microelectronics
Wolfson Microelectronics plc is a multinational microelectronics and fabless semiconductor company headquartered in Edinburgh, United Kingdom. It specialises in signal processing chips for the consumer electronics market and has engineering and sales offices throughout Asia-Pacific, Europe and the...

, 4i2i
4i2i Communications
4i2i Communications Ltd. is a supplier of semiconductor IP cores, software and board level solutions for video coding, error correction coding and broad-band modems. Headquartered in Aberdeen, Scotland, it also has offices in Edinburgh, Scotland and San Jose, California, USA. The company...

, Linn
Linn Products
Linn Products is a Scottish company, based in Glasgow, that manufactures hi-fi audio equipment, home theatre, and multi-room integrated audio systems...

, Nallatech. and Axeon There is also a significant presence of global players like National Semiconductor
National Semiconductor
National Semiconductor was an American semiconductor manufacturer, that specialized in analog devices and subsystems,formerly headquartered in Santa Clara, California, USA. The products of National Semiconductor included power management circuits, display drivers, audio and operational amplifiers,...

 and Motorola
Motorola
Motorola, Inc. was an American multinational telecommunications company based in Schaumburg, Illinois, which was eventually divided into two independent public companies, Motorola Mobility and Motorola Solutions on January 4, 2011, after losing $4.3 billion from 2007 to 2009...

. Other major industries include banking and financial services
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...

, construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...

, education
Education
Education in its broadest, general sense is the means through which the aims and habits of a group of people lives on from one generation to the next. Generally, it occurs through any experience that has a formative effect on the way one thinks, feels, or acts...

, entertainment
Entertainment
Entertainment consists of any activity which provides a diversion or permits people to amuse themselves in their leisure time. Entertainment is generally passive, such as watching opera or a movie. Active forms of amusement, such as sports, are more often considered to be recreation...

, biotechnology
Biotechnology
Biotechnology is a field of applied biology that involves the use of living organisms and bioprocesses in engineering, technology, medicine and other fields requiring bioproducts. Biotechnology also utilizes these products for manufacturing purpose...

, transport equipment, oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....

 and gas
Gas
Gas is one of the three classical states of matter . Near absolute zero, a substance exists as a solid. As heat is added to this substance it melts into a liquid at its melting point , boils into a gas at its boiling point, and if heated high enough would enter a plasma state in which the electrons...

, whisky
Whisky
Whisky or whiskey is a type of distilled alcoholic beverage made from fermented grain mash. Different grains are used for different varieties, including barley, malted barley, rye, malted rye, wheat, and corn...

, and tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...

. The Gross Domestic Product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....

 (GDP) of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 was £131,163 million, including oil and gas produced in Scottish waters, for
2009-10 .

Edinburgh is the financial services centre of Scotland, with many large financial firms based there. Glasgow is the fourth largest manufacturing centre in the UK, accounting for well over 60% of Scotland's manufactured exports. Shipbuilding, although significantly diminished from its heights in the early 20th century, is still a large part of the Glasgow economy. Aberdeen is the centre of North Sea offshore oil and gas production, with giants such as Shell and BP housing their European exploration and production HQs in the city. Other important industries include textile production, chemicals, distilling, agriculture, brewing and fishing.

Natural resources

Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 has a large abundance of natural resources from fertile land, suitable for agriculture, to oil and gas. In terms of mineral resources, Scotland produces coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...

, zinc
Zinc
Zinc , or spelter , is a metallic chemical element; it has the symbol Zn and atomic number 30. It is the first element in group 12 of the periodic table. Zinc is, in some respects, chemically similar to magnesium, because its ion is of similar size and its only common oxidation state is +2...

, iron, oil shale
Oil shale
Oil shale, an organic-rich fine-grained sedimentary rock, contains significant amounts of kerogen from which liquid hydrocarbons called shale oil can be produced...

. The coal seams beneath central Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

, in particular in Ayrshire
Ayrshire
Ayrshire is a registration county, and former administrative county in south-west Scotland, United Kingdom, located on the shores of the Firth of Clyde. Its principal towns include Ayr, Kilmarnock and Irvine. The town of Troon on the coast has hosted the British Open Golf Championship twice in the...

 and Fife
Fife
Fife is a council area and former county of Scotland. It is situated between the Firth of Tay and the Firth of Forth, with inland boundaries to Perth and Kinross and Clackmannanshire...

 contributed significantly to the industrialisation of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 during the 19th century. The mining of coal - once a major employer in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 has declined in importance since the later half of the 20th century, due to cheaper foreign coal and the exhaustion of many seams. The last deep-coal mine was at Longannet on the Firth of Forth
Firth of Forth
The Firth of Forth is the estuary or firth of Scotland's River Forth, where it flows into the North Sea, between Fife to the north, and West Lothian, the City of Edinburgh and East Lothian to the south...

. It closed in 2002. A modest amount of opencast coal mining continues.

Agriculture and forestry

Only about one quarter of the land is under cultivation - mainly in cereals. Barley
Barley
Barley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...

, wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...

 and potatoes are grown in eastern parts of Scotland such as Aberdeenshire, Moray, Highland, Fife and the Scottish Borders
Scottish Borders
The Scottish Borders is one of 32 local government council areas of Scotland. It is bordered by Dumfries and Galloway in the west, South Lanarkshire and West Lothian in the north west, City of Edinburgh, East Lothian, Midlothian to the north; and the non-metropolitan counties of Northumberland...

. The Tayside and Angus
Angus
Angus is one of the 32 local government council areas of Scotland, a registration county and a lieutenancy area. The council area borders Aberdeenshire, Perth and Kinross and Dundee City...

 area is a centre of production of soft fruits such as strawberries
Strawberry
Fragaria is a genus of flowering plants in the rose family, Rosaceae, commonly known as strawberries for their edible fruits. Although it is commonly thought that strawberries get their name from straw being used as a mulch in cultivating the plants, the etymology of the word is uncertain. There...

, raspberries
Raspberry
The raspberry or hindberry is the edible fruit of a multitude of plant species in the genus Rubus, most of which are in the subgenus Idaeobatus; the name also applies to these plants themselves...

 and loganberries
Loganberry
The loganberry is an hexaploid hybrid produced from crossing an octaploid blackberry and a diploid red raspberry. The plant and the fruit resemble the blackberry more than the raspberry, but the fruit colour is a dark red, rather than black...

, owing to the mild climate. Sheep raising is important in the less arable mountainous regions, such as the northwest of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 which are used for rough grazing, due to its geographical isolation, poor climate
Climate
Climate encompasses the statistics of temperature, humidity, atmospheric pressure, wind, rainfall, atmospheric particle count and other meteorological elemental measurements in a given region over long periods...

 and acidic soils. Parts of the east of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 (areas such as Aberdeenshire
Aberdeenshire
Aberdeenshire is one of the 32 unitary council areas in Scotland and a lieutenancy area.The present day Aberdeenshire council area does not include the City of Aberdeen, now a separate council area, from which its name derives. Together, the modern council area and the city formed historic...

, Fife
Fife
Fife is a council area and former county of Scotland. It is situated between the Firth of Tay and the Firth of Forth, with inland boundaries to Perth and Kinross and Clackmannanshire...

 and Angus
Angus
Angus is one of the 32 local government council areas of Scotland, a registration county and a lieutenancy area. The council area borders Aberdeenshire, Perth and Kinross and Dundee City...

) are major centres of cereal
Cereal
Cereals are grasses cultivated for the edible components of their grain , composed of the endosperm, germ, and bran...

 production and general cropping. In such areas, the land is generally flatter, coastal, and the climate less harsh, and more suited to cultivation
Tillage
Tillage is the agricultural preparation of the soil by mechanical agitation of various types, such as digging, stirring, and overturning. Examples of human-powered tilling methods using hand tools include shovelling, picking, mattock work, hoeing, and raking...

. The south-west of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 - principally Ayrshire
Ayrshire
Ayrshire is a registration county, and former administrative county in south-west Scotland, United Kingdom, located on the shores of the Firth of Clyde. Its principal towns include Ayr, Kilmarnock and Irvine. The town of Troon on the coast has hosted the British Open Golf Championship twice in the...

 and Dumfries and Galloway
Dumfries and Galloway
Dumfries and Galloway is one of 32 unitary council areas of Scotland. It was one of the nine administrative 'regions' of mainland Scotland created in 1975 by the Local Government etc. Act 1973...

 - is a centre of dairying. Agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...

, especially cropping
Crop (agriculture)
A crop is a non-animal species or variety that is grown to be harvested as food, livestock fodder, fuel or for any other economic purpose. Major world crops include maize , wheat, rice, soybeans, hay, potatoes and cotton. While the term "crop" most commonly refers to plants, it can also include...

 in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

, is highly mechanised and generally efficient. Farms tend to cover larger areas than their European counterparts. Hill farming
Hill farming
Hill farming is extensive farming in upland areas, primarily rearing sheep, although historically cattle was often reared more intensively.Cattle farming is usually restricted by a scarcity of winter fodder, and sheep stocks, grazing at about 2 hectares per head, are often taken to lowland areas...

 is also prominent in the Southern Uplands
Southern Uplands
The Southern Uplands are the southernmost and least populous of mainland Scotland's three major geographic areas . The term is used both to describe the geographical region and to collectively denote the various ranges of hills within this region...

 in the south of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

, resulting in the production of wool
Wool
Wool is the textile fiber obtained from sheep and certain other animals, including cashmere from goats, mohair from goats, qiviut from muskoxen, vicuña, alpaca, camel from animals in the camel family, and angora from rabbits....

, Lamb and mutton. Cattle-Rearing particularly in the east and south of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 results in the production of large amounts of beef
Beef
Beef is the culinary name for meat from bovines, especially domestic cattle. Beef can be harvested from cows, bulls, heifers or steers. It is one of the principal meats used in the cuisine of the Middle East , Australia, Argentina, Brazil, Europe and the United States, and is also important in...

. Farming in Scotland has been particularly hard hit in recent years and is still recovering from the effects of the BSE
Bovine spongiform encephalopathy
Bovine spongiform encephalopathy , commonly known as mad-cow disease, is a fatal neurodegenerative disease in cattle that causes a spongy degeneration in the brain and spinal cord. BSE has a long incubation period, about 30 months to 8 years, usually affecting adult cattle at a peak age onset of...

 and the European ban on the importation of British beef from 1996. Dairy and Cattle farmers in south-west Scotland were affected by the 2001 UK Foot and Mouth outbreak
2001 UK foot and mouth crisis
The outbreak of foot-and-mouth disease in the United Kingdom in 2001 caused a crisis in British agriculture and tourism. This epizootic saw 2,000 cases of the disease in farms in most of the British countryside. Over 10 million sheep and cattle were killed in an eventually successful attempt to...

, which resulted in the destruction of much of their livestock as part of the biosecurity
Biosecurity
Biosecurity is a set of preventive measures designed to reduce the risk of transmission of infectious diseases, quarantined pests, invasive alien species, living modified organisms...

 effort to control the spread of the disease.

Because of the persistence of feudalism and the land enclosures of the 19th century the ownership of most land is concentrated in relatively few hands (some 350 people own about half the land). In 2003, as a result, the Scottish Parliament passed a Land Reform Act that empowered tenant farmers and communities to purchase land even if the landlord did not want to sell.

About 13,340 km² of land in Scotland is forested - this represents around 15% of the total land area of Scotland. The majority of forests are in public ownership, with forestry policy being controlled by the Forestry Commission
Forestry Commission
The Forestry Commission is a non-ministerial government department responsible for forestry in Great Britain. Its mission is to protect and expand Britain's forests and woodlands and increase their value to society and the environment....

. The biggest plantations and timber resources are to be found in Dumfries and Galloway
Dumfries and Galloway
Dumfries and Galloway is one of 32 unitary council areas of Scotland. It was one of the nine administrative 'regions' of mainland Scotland created in 1975 by the Local Government etc. Act 1973...

, Tayside
Tayside
Tayside Region was a local government region of Scotland from 15 May 1975 to 31 March 1996. It was created by the 1973 Act following recommendations made by the 1969 Wheatley Report which attempted to replace the mishmash of counties, cities, burghs and districts, with a uniform two-tier system...

, Argyll
Argyll
Argyll , archaically Argyle , is a region of western Scotland corresponding with most of the part of ancient Dál Riata that was located on the island of Great Britain, and in a historical context can be used to mean the entire western coast between the Mull of Kintyre and Cape Wrath...

 and the Scottish Highlands
Scottish Highlands
The Highlands is an historic region of Scotland. The area is sometimes referred to as the "Scottish Highlands". It was culturally distinguishable from the Lowlands from the later Middle Ages into the modern period, when Lowland Scots replaced Scottish Gaelic throughout most of the Lowlands...

. The economic activities generated by forestry in Scotland include planting and harvesting as well as sawmilling, the production of pulp and paper and the manufacture of higher value goods. Forests, especially those surrounding populated areas in Central Scotland also provide a recreation resource.

Fishing

The waters surrounding Scotland are some of the richest in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

. Fishing is an economic mainstay in parts of the North East of Scotland and along the west coast, with important fish markets in places such as Aberdeen
Aberdeen
Aberdeen is Scotland's third most populous city, one of Scotland's 32 local government council areas and the United Kingdom's 25th most populous city, with an official population estimate of ....

 and Mallaig
Mallaig
Mallaig ; is a port in Lochaber, on the west coast of the Highlands of Scotland. The local railway station, Mallaig, is the terminus of the West Highland railway line , completed in 1901, and the town is linked to Fort William by the A830 road – the "Road to the Isles".The village of Mallaig...

. Fish and shellfish such as herring
Herring
Herring is an oily fish of the genus Clupea, found in the shallow, temperate waters of the North Pacific and the North Atlantic oceans, including the Baltic Sea. Three species of Clupea are recognized. The main taxa, the Atlantic herring and the Pacific herring may each be divided into subspecies...

, crab
Crab
True crabs are decapod crustaceans of the infraorder Brachyura, which typically have a very short projecting "tail" , or where the reduced abdomen is entirely hidden under the thorax...

, lobster
Lobster
Clawed lobsters comprise a family of large marine crustaceans. Highly prized as seafood, lobsters are economically important, and are often one of the most profitable commodities in coastal areas they populate.Though several groups of crustaceans are known as lobsters, the clawed lobsters are most...

, haddock
Haddock
The haddock , also known as the offshore hake, is a marine fish distributed on both sides of the North Atlantic. Haddock is a popular food fish and is widely fished commercially....

 and cod
Cod
Cod is the common name for genus Gadus, belonging to the family Gadidae, and is also used in the common name for various other fishes. Cod is a popular food with a mild flavor, low fat content and a dense, flaky white flesh. Cod livers are processed to make cod liver oil, an important source of...

 are landed at ports such as Fraserburgh
Fraserburgh
Fraserburgh is a town in Aberdeenshire, Scotland with a population recorded in the 2001 Census at 12,454 and estimated at 12,630 in 2006. It lies at the extreme northeast corner of Aberdeenshire, around north of Aberdeen, and north of Peterhead...

, Stornoway
Stornoway
Stornoway is a burgh on the Isle of Lewis, in the Outer Hebrides of Scotland.The town's population is around 9,000, making it the largest settlement in the Western Isles and the third largest town in the Scottish Highlands after Inverness and Fort William...

, Lerwick
Lerwick
Lerwick is the capital and main port of the Shetland Islands, Scotland, located more than 100 miles off the north coast of mainland Scotland on the east coast of the Shetland Mainland...

 and Oban
Oban
Oban Oban Oban ( is a resort town within the Argyll and Bute council area of Scotland. It has a total resident population of 8,120. Despite its small size, it is the largest town between Helensburgh and Fort William and during the tourist season the town can be crowded by up to 25,000 people. Oban...

. There has been a large scale decrease in employment in the fishing industry within Scotland. This is due to the historically low abundances of commercially valuable fish in the North Sea
North Sea
In the southwest, beyond the Straits of Dover, the North Sea becomes the English Channel connecting to the Atlantic Ocean. In the east, it connects to the Baltic Sea via the Skagerrak and Kattegat, narrow straits that separate Denmark from Norway and Sweden respectively...

 and parts of the North Atlantic. In order to rebuild stocks the EU's Common Fisheries Policy
Common Fisheries Policy
The Common Fisheries Policy is the fisheries policy of the European Union . It sets quotas for which member states are allowed to catch what amounts of each type of fish, as well as encouraging the fishing industry by various market interventions...

 places restrictions on the total tonnage of catch that can be landed, on the days at sea allowed and on fishing gear that can be deployed. These measures have so far been unsuccessful. In tandem with the decline of sea-fishing, commercial fish farms - especially in salmon
Salmon
Salmon is the common name for several species of fish in the family Salmonidae. Several other fish in the same family are called trout; the difference is often said to be that salmon migrate and trout are resident, but this distinction does not strictly hold true...

, have increased in prominence in the rivers and lochs of the north and west of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

. Inland waters are rich in fresh water fish such as salmon
Salmon
Salmon is the common name for several species of fish in the family Salmonidae. Several other fish in the same family are called trout; the difference is often said to be that salmon migrate and trout are resident, but this distinction does not strictly hold true...

 and trout
Trout
Trout is the name for a number of species of freshwater and saltwater fish belonging to the Salmoninae subfamily of the family Salmonidae. Salmon belong to the same family as trout. Most salmon species spend almost all their lives in salt water...

 although here too there has been an inexorable and so far unexplained decline in abundance over the past decades.

Oil and gas

With Scottish waters consisting of a large sector of the North Atlantic and the North Sea, containing the largest oil
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

 resources in the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 -
Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 is the EU's largest petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

 producer, with the discovery of North Sea oil
North Sea oil
North Sea oil is a mixture of hydrocarbons, comprising liquid oil and natural gas, produced from oil reservoirs beneath the North Sea.In the oil industry, the term "North Sea" often includes areas such as the Norwegian Sea and the area known as "West of Shetland", "the Atlantic Frontier" or "the...

 transforming the Scottish economy. Oil was discovered in the North Sea in 1966, with the first year of full production taking place in 1976. With the growth of oil exploration during that time, as well as the ancillary industries needed to support it, the city of Aberdeen
Aberdeen
Aberdeen is Scotland's third most populous city, one of Scotland's 32 local government council areas and the United Kingdom's 25th most populous city, with an official population estimate of ....

 became centre of the North Sea Oil Industry, which it still is today, with the port and harbour serving many oil fields off shore. Sullom Voe
Sullom Voe
Sullom Voe is an inlet between North Mainland and Northmavine on Shetland in Scotland. It is a location of the Sullom Voe oil terminal. The word Voe is from the Old Norse vagr and denotes a small bay or narrow creek...

 in Shetland is the site of a major oil terminal, where oil is piped in and transferred to tankers. Similarly the Flotta
Flotta
Flotta is a small island in Orkney, Scotland, lying in Scapa Flow. The island is known for its large oil terminal and is linked by Orkney Ferries to Houton on the Orkney Mainland and Lyness and Longhope on Hoy....

 Oil Terminal in Orkney is linked by a 230 km long pipeline to the Piper and Occidental oil fields in the North Sea
North Sea
In the southwest, beyond the Straits of Dover, the North Sea becomes the English Channel connecting to the Atlantic Ocean. In the east, it connects to the Baltic Sea via the Skagerrak and Kattegat, narrow straits that separate Denmark from Norway and Sweden respectively...

. Grangemouth
Grangemouth
Grangemouth is a town and former burgh in the council area of Falkirk, Scotland. The town lies in the Forth Valley, on the banks of the Firth of Forth, east of Falkirk, west of Bo'ness and south-east of Stirling. Grangemouth had a resident population of 17,906 according to the 2001...

 is at the centre of Scotland's petrochemical
Petrochemical
Petrochemicals are chemical products derived from petroleum. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sources such as corn or sugar cane....

s industry. The oil related industries are a major source of employment and income in these regions. It is estimated that the industry employs around 100,000 workers (or 6% of the working population) of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

.

Although North Sea oil production has begun to decline, an estimated 920 million tonnes of recoverable crude oil remain. Over two and a half billion tonnes were recovered from UK offshore oil fields between the first North Sea crude coming ashore in 1975 and 2002, with most oil fields being expected to remain economically viable until at least 2020. High oil prices have resulted in a resurgence of oil exploration, specifically in the North East Atlantic basin to the west of Shetland and the Outer Hebrides
Outer Hebrides
The Outer Hebrides also known as the Western Isles and the Long Island, is an island chain off the west coast of Scotland. The islands are geographically contiguous with Comhairle nan Eilean Siar, one of the 32 unitary council areas of Scotland...

, in areas that were previously considered marginal and unprofitable.

Energy

Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 is endowed with some of the best energy resources in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

, and is a net exporter of electricity
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...

, with a generating capacity of 10.1GW primarily from coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...

, oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....

, gas
Gas
Gas is one of the three classical states of matter . Near absolute zero, a substance exists as a solid. As heat is added to this substance it melts into a liquid at its melting point , boils into a gas at its boiling point, and if heated high enough would enter a plasma state in which the electrons...

 and nuclear
Nuclear power
Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...

 generation. The principal companies operating in the sector are Scottish Power
Scottish Power
ScottishPower Ltd. is a vertically integrated energy company with its headquarters in Glasgow, Scotland. It was listed on the London Stock Exchange and was once a constituent of the FTSE 100 Index but in 2006 it became a subsidiary of the Spanish utility Iberdrola...

, Scottish and Southern Energy and British Energy
British Energy
British Energy was the UK's largest electricity generation company by volume, before being taken over by Électricité de France in 2009. British Energy operated eight former UK state-owned nuclear power stations and one coal fired power station....

. With prevailing international concern over the use of fossil fuels in power generation, Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 has been identified as having significant potential for the development of renewable energy sources, with abundant wave, tidal and wind power.

The Scottish Government has set ambitious targets that 18% of Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

's electricity generation be derived from renewable sources by 2010, rising to 40% by 2020. Currently renewable energy sources provide Scotland with 13% of its electricity production, with onshore wind generation making the largest contribution, and supporting several thousand jobs. There are many windfarms along the coast and hills, with plans to create one of the world's largest onshore windfarms at Barvas Moor on the Hebridean island of Lewis
Lewis
Lewis is the northern part of Lewis and Harris, the largest island of the Western Isles or Outer Hebrides of Scotland. The total area of Lewis is ....

.

There have also been major developments in harnessing the wave and tidal potential around the Scottish Coast, with the LIMPET (Land Installed Marine Power Energy Transformer) energy converter being installed off the island of Islay
Islay
-Prehistory:The earliest settlers on Islay were nomadic hunter-gatherers who arrived during the Mesolithic period after the retreat of the Pleistocene ice caps. In 1993 a flint arrowhead was found in a field near Bridgend dating from 10,800 BC, the earliest evidence of a human presence found so far...

, which produces power for the National Grid. LIMPET, developed in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

, is the world's first commercial scale wave-energy device.

Manufacturing

Scotland's heavy industry began to develop in the second half of the 18th century. The Carron Company
Carron Company
The Carron Company was an ironworks established in 1759 on the banks of the River Carron near Falkirk, in Stirlingshire, Scotland. After initial problems, the company was at the forefront of the Industrial Revolution in the United Kingdom. The company prospered through its development and...

 established its ironworks at Falkirk in 1759, initially using imported ore but later using locally sourced Ironstone
Ironstone
Ironstone is a sedimentary rock, either deposited directly as a ferruginous sediment or created by chemical repacement, that contains a substantial proportion of an iron compound from which iron either can be or once was smelted commercially. This term is customarily restricted to hard coarsely...

.The iron
Iron
Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...

 industry expanded tenfold between 1830 and 1844. The shipbuilding
Shipbuilding
Shipbuilding is the construction of ships and floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roots to before recorded history.Shipbuilding and ship repairs, both...

 industry on the River Clyde increased greatly from the 1840s and by 1870 the Clyde was producing more than half of Britain's tonnage of shipping. The heavy industries around shipbuilding and locomotives went into severe decline after World War II.

Manufacturing in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 has shifted its focus in recent years with heavy industries such as shipbuilding and iron and steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...

 declining in their importance and contribution to the economy. It is generally argued that this has been in response to increasing globalisation and competition from low cost producers across the world, which has eroded Scotland's comparative advantage
Comparative advantage
In economics, the law of comparative advantage says that two countries will both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods...

 in such industries over the later half of the 20th century. However, the decline in heavy industry in Scotland has been supplanted with the rise in the manufacture of lighter, less labour intensive products such as optoelectronics
Optoelectronics
Optoelectronics is the study and application of electronic devices that source, detect and control light, usually considered a sub-field of photonics. In this context, light often includes invisible forms of radiation such as gamma rays, X-rays, ultraviolet and infrared, in addition to visible light...

, software, chemical products and derivatives as well as life sciences
Life sciences
The life sciences comprise the fields of science that involve the scientific study of living organisms, like plants, animals, and human beings. While biology remains the centerpiece of the life sciences, technological advances in molecular biology and biotechnology have led to a burgeoning of...

. The Engineering and Defence
Defense contractor
A defense contractor is a business organization or individual that provides products or services to a military department of a government. Products typically include military aircraft, ships, vehicles, weaponry, and electronic systems...

 sectors employ around 30,000 people in Scotland. The principal companies operating in the sector include; BAE Systems
BAE Systems
BAE Systems plc is a British multinational defence, security and aerospace company headquartered in London, United Kingdom, that has global interests, particularly in North America through its subsidiary BAE Systems Inc. BAE is among the world's largest military contractors; in 2009 it was the...

, Rolls-Royce
Rolls-Royce plc
Rolls-Royce Group plc is a global power systems company headquartered in the City of Westminster, London, United Kingdom. It is the world’s second-largest maker of aircraft engines , and also has major businesses in the marine propulsion and energy sectors. Through its defence-related activities...

, Raytheon
Raytheon
Raytheon Company is a major American defense contractor and industrial corporation with core manufacturing concentrations in weapons and military and commercial electronics. It was previously involved in corporate and special-mission aircraft until early 2007...

, Alexander Dennis
Alexander Dennis
Alexander Dennis Limited is the largest bus builder in the United Kingdom. It incorporated the three last surviving bus manufacturers which started bus production before World War II: Dennis, Alexander and Plaxton.- History :Alexander Dennis was formed as TransBus on 1 January 2001, after the...

, Thales
Thales Group
The Thales Group is a French electronics company delivering information systems and services for the aerospace, defense, transportation and security markets...

, Selex
SELEX Sensors and Airborne Systems
SELEX Galileo is a major defence electronics company that specialises in surveillance, protection, tracking, targeting, navigation and control, and imaging systems. It is owned by the Italian company Finmeccanica....

 and Babcock
Babcock International Group
Babcock International Group plc is a British-based support services company specialising in managing complex assets and infrastructure in safety-critical and mission-critical environments. Although the company has civil contracts, its main business is with public bodies, particularly the UK...

. The decline of heavy industry resulted in a sectoral shift of labour. This has led to smaller firms strengthening links with the academic community and substantial, industry-specific retraining programmes for the workforce.

Whisky

Whisky is probably the best known of Scotland's manufactured exports contributing around £800 million to the Scottish economy, supporting 41,000 jobs as well as adding £2 billion to the balance of trade making it one of the UK’s top five manufacturing export earners. The Whisky industry also generates a substantial income for the government with around £1.6bn raised in duty
Duty
Duty is a term that conveys a sense of moral commitment to someone or something. The moral commitment is the sort that results in action and it is not a matter of passive feeling or mere recognition...

 each year. The principal whisky producing areas include Speyside
Speyside
Speyside can refer to:* Strathspey, Scotland, the famous whisky producing region by the River Spey** Speyside single malts, the type of whisky produced in Strathspey* Speyside, Trinidad and Tobago in Trinidad and Tobago...

 and the island of Islay
Islay
-Prehistory:The earliest settlers on Islay were nomadic hunter-gatherers who arrived during the Mesolithic period after the retreat of the Pleistocene ice caps. In 1993 a flint arrowhead was found in a field near Bridgend dating from 10,800 BC, the earliest evidence of a human presence found so far...

 where there are 8 distilleries providing a major source of employment for the island. In many areas the whisky industry is closely related with tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...

, with many distilleries also functioning as tourist attractions worth £30 million Gross Value Added
Gross value added
Gross Value Added ' is a measure in economics of the value of goods and services produced in an area, industry or sector of an economy...

 to the industry each year.

Electronics

The electronics industry in Scotland Silicon Glen
Silicon Glen
Silicon Glen is a nickname for the high tech sector of Scotland. It is applied to the Central Belt triangle between Dundee, Inverclyde and Edinburgh, which includes Fife, Glasgow and Stirling; although electronics facilities outside this area may also be included in the term. The term has been in...

 is the phrase that is used to describe the growth and development of Scotland's hi-tech and electronics industries in the Central Belt
Central Lowlands
The Central Lowlands or Midland Valley is a geologically defined area of relatively low-lying land in southern Scotland. It consists of a rift valley between the Highland Boundary Fault to the north and the Southern Uplands Fault to the south...

 through the 1980s and 1990s, analogous to the larger concentration of hi-tech industries in Silicon Valley
Silicon Valley
Silicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...

, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

. Companies such as IBM
IBM
International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...

 and Hewlett-Packard
Hewlett-Packard
Hewlett-Packard Company or HP is an American multinational information technology corporation headquartered in Palo Alto, California, USA that provides products, technologies, softwares, solutions and services to consumers, small- and medium-sized businesses and large enterprises, including...

 have been in Scotland since the 1950s being joined in the 1980s by others such as Sun Microsystems
Sun Microsystems
Sun Microsystems, Inc. was a company that sold :computers, computer components, :computer software, and :information technology services. Sun was founded on February 24, 1982...

 (now owned by Oracle
Oracle Corporation
Oracle Corporation is an American multinational computer technology corporation that specializes in developing and marketing hardware systems and enterprise software products – particularly database management systems...

). 45,000 people are employed by electronics and electronics-related firms, accounting for 12% of manufacturing output. Today, Scotland produces 28% of Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

’s PCs; more than seven per cent of the world’s PC
Personal computer
A personal computer is any general-purpose computer whose size, capabilities, and original sales price make it useful for individuals, and which is intended to be operated directly by an end-user with no intervening computer operator...

s; and 29% of Europe’s notebooks.

Textiles

Historically Scotland's export trade was based around animal hides and wool. This trade was firstly organised around religious centres such as Melrose Abbey
Melrose Abbey
Melrose Abbey is a Gothic-style abbey in Melrose, Scotland. It was founded in 1136 by Cistercian monks, on the request of King David I of Scotland. It was headed by the Abbot or Commendator of Melrose. Today the abbey is maintained by Historic Scotland...

. The trade expanded towards long-established maritime bases for Scottish trade at Bruges
Bruges
Bruges is the capital and largest city of the province of West Flanders in the Flemish Region of Belgium. It is located in the northwest of the country....

 and then Veere
Veere
Veere is a municipality and a city in the southwestern Netherlands, on Walcheren island in the province of Zeeland.-Population centres :Aagtekerke , Biggekerke , Domburg , Gapinge , Grijpskerke , Koudekerke , Meliskerke , Oostkapelle , Serooskerke , Veere , Vrouwenpolder , Westkapelle...

 in the Low Countries and at Elbląg
Elblag
Elbląg is a city in northern Poland with 127,892 inhabitants . It is the capital of Elbląg County and has been assigned to the Warmian-Masurian Voivodeship since 1999. Before then it was the capital of Elbląg Voivodeship and a county seat in Gdańsk Voivodeship...

 and Gdańsk
Gdansk
Gdańsk is a Polish city on the Baltic coast, at the centre of the country's fourth-largest metropolitan area.The city lies on the southern edge of Gdańsk Bay , in a conurbation with the city of Gdynia, spa town of Sopot, and suburban communities, which together form a metropolitan area called the...

 in the Baltic.

During the 18th century, the trade in linen
Linen
Linen is a textile made from the fibers of the flax plant, Linum usitatissimum. Linen is labor-intensive to manufacture, but when it is made into garments, it is valued for its exceptional coolness and freshness in hot weather....

 overtook that in wool, peaking at over 12 million yards produced in 1775. Production remained in cottage industry units but the trading conditions were locked into the modern economy and gave rise to institutions such as the British Linen Bank
British Linen Bank
The British Linen Bank was a commercial bank based in Edinburgh, Scotland. It was acquired by the Bank of Scotland in 1969 and served as the Bank's merchant bank arm from 1977 until 1999.-Foundation:...

.

The cotton mills began to replace linen in economic importance during the 1770s, with the first mill opening in Penicuik
Penicuik
Penicuik is a burgh and civil parish in Midlothian, Scotland, lying on the west bank of the River North Esk. The town was developed as a planned village in 1770 by Sir James Clerk of Penicuik. It became a burgh in 1867. The town was well known for its paper mills, the last of which closed in 2005....

 in 1778. The trade brought urbanisation of the population, including large numbers of migrants from the Highlands and from Ireland. The thread manufacturers Coats plc had its origin in that trade.

In modern times, Knitwear and tweed
Tweed (cloth)
Tweed is a rough, unfinished woolen fabric, of a soft, open, flexible texture, resembling cheviot or homespun, but more closely woven. It is made in either plain or twill weave and may have a check or herringbone pattern...

 are seen as traditional cottage industries but names like Pringle
Pringle of Scotland
Pringle of Scotland is a luxury knitwear manufacturer and importer. The brand is worn by the likes of Madonna, DB7 , Nicole Kidman, Sophie Dahl, Claudia Schiffer, the television character Alan Partridge and British bands such as The Kooks, Dirty Pretty Things and The Twang...

 have given Scottish knitwear and apparel a presence on the international market. Despite increasing competition from low-cost textile producers in SE Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...

 and the Indian subcontinent
Indian subcontinent
The Indian subcontinent, also Indian Subcontinent, Indo-Pak Subcontinent or South Asian Subcontinent is a region of the Asian continent on the Indian tectonic plate from the Hindu Kush or Hindu Koh, Himalayas and including the Kuen Lun and Karakoram ranges, forming a land mass which extends...

, textiles in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 is still a major employer with a workforce of around 22,000. Furthermore the textiles industry is the 7th largest exporter in Scotland accounting for over 3% of all Scottish manufactured products.

Construction

Scotland builds around 24,000 new homes per year, about 1% of its existing dwelling stock. The home building industry in Scotland directly and indirectly contributed around £5 billion to the Scottish economy in 2006 - that's 6% of GDP and greater than that of higher profile industries such as agriculture, fishing, electronics and tourism. The net value of new building and repairs, maintenance and improvements combined is just under £11.6 billion, which is 14.0% of Scottish GDP in 2006.

The Scottish Government plans to increase the number of new homes built each year to 35,000 by 2015. Communities Scotland
Communities Scotland
Communities Scotland was an executive agency of the Scottish Government from 2001 to 2008. The Agency was responsible for housing, homelessness, communities and regeneration throughout Scotland....

, the government agency previously responsible for housing strategy has been replaced, this function now being undertaken by core Government bodies. The 'Right to Buy' has also been ended for new social housing built by councils and housing associations, and a new 'Sustainable Communities Initiative' has been established to encourage local authorities and their partners to plan for and build sustainable new settlements. Eight out of every ten new homes are for private purchase. The industry works in partnership with local authorities and housing associations to provide low cost housing for sale and social housing for rent.

Major trading partners

Excluding intra UK trade, the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 and the EU constitute the largest markets for Scotland's exports. As part of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 and the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

, Scotland fully participates in the Single Market
Single market
A single market is a type of trade bloc which is composed of a free trade area with common policies on product regulation, and freedom of movement of the factors of production and of enterprise and services. The goal is that the movement of capital, labour, goods, and services between the members...

 and Free Trade Area
Free trade area
A free trade area is a trade bloc whose member countries have signed a free trade agreement , which eliminates tariffs, import quotas, and preferences on most goods and services traded between them. If people are also free to move between the countries, in addition to FTA, it would also be...

 which exists across all EU member states and regions. Recently with the high rates of growth in many emerging economies of SE Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...

 such as China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...

, Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...

 and Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

, there has been a drive towards marketing Scottish products and manufactures in these countries, with Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

 entering the top ten markets for Scottish exports in 2004.
Top 10 export destinations, 2007
Export destination Value (£million)
USA 3,610
Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...

2,645
Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

2,600
France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

2,165
Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...

1,775
Republic of Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...

1,700
Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

1,585
Belgium
Belgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...

955
Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...

925
Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

865
Source: Scottish Executive Global Connections Survey 2005

Services

Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

 is Europe's 11th largest financial centre, with influential financial players such as the Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

 , the Bank of Scotland
Bank of Scotland
The Bank of Scotland plc is a commercial and clearing bank based in Edinburgh, Scotland. With a history dating to the 17th century, it is the second oldest surviving bank in what is now the United Kingdom, and is the only commercial institution created by the Parliament of Scotland to...

, Scottish Widows
Scottish Widows
Scottish Widows plc is a life, pensions and investment company located in Edinburgh, Scotland, and is a subsidiary of Lloyds Banking Group. Its product range includes life assurance, pensions, investments and savings...

 and Standard Life
Standard Life
Standard Life plc is a long term savings and investment business, with headquarters in Edinburgh and operations across the globe. It has 1.5 million shareholders in more than 50 countries and over 6 million customers.-History:...

 all having a presence in the city.

Centred primarily on the cities of Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

 and Glasgow
Glasgow
Glasgow is the largest city in Scotland and third most populous in the United Kingdom. The city is situated on the River Clyde in the country's west central lowlands...

, the financial services industry in the Scottish Economy expanded greatly in recent years, with a growth rate of over 35% over the period 2000 to 2005. The sector employs 5% of the Scottish workforce or 113,160 people and generates £5bn or 6% of Scotland's GDP.

Banking

Banking in Scotland has a long history, beginning with the creation of the Bank of Scotland
Bank of Scotland
The Bank of Scotland plc is a commercial and clearing bank based in Edinburgh, Scotland. With a history dating to the 17th century, it is the second oldest surviving bank in what is now the United Kingdom, and is the only commercial institution created by the Parliament of Scotland to...

, in Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

, in 1695 and expanding greatly to support the trading developments of the 18th and 19th centuries. Retail banking services to ordinary people followed in the 19th century, on the trustee savings bank
Trustee Savings Bank
The Trustee Savings Bank was a British financial institution which specialised in accepting savings deposits from the poor. They did not trade their shares on the stock market and, unlike mutually held building societies, depositors had no voting rights nor the ability to direct the financial and...

 model pioneered by Rev. Henry Duncan

Today Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 is home to 4 clearing banks - the Bank of Scotland
Bank of Scotland
The Bank of Scotland plc is a commercial and clearing bank based in Edinburgh, Scotland. With a history dating to the 17th century, it is the second oldest surviving bank in what is now the United Kingdom, and is the only commercial institution created by the Parliament of Scotland to...

, the Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

, the Clydesdale Bank
Clydesdale Bank
Clydesdale Bank is a commercial bank in Scotland, a subsidiary of the National Australia Bank Group. In Scotland, Clydesdale Bank is the third largest clearing bank, although it also retains a branch network in London and the north of England...

 and Lloyds TSB Scotland. The Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

 expanded internationally to the second largest bank in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

, fourth largest in the world by market capitalisation in 2008 but has subsequently declined; its new global headquarters in Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

 augmented the city's position as a major financial centre. In 2005 Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 ranked second only to London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...

 in the European league of headquarters locations of the 30 largest banks in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

 as measured by market value.

Although the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...

 remains the central bank for the UK Government, three Scottish clearing banks still issue their own banknote
Banknote
A banknote is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money, and in many jurisdictions is legal tender. In addition to coins, banknotes make up the cash or bearer forms of all modern fiat money...

s: (the Bank of Scotland
Bank of Scotland
The Bank of Scotland plc is a commercial and clearing bank based in Edinburgh, Scotland. With a history dating to the 17th century, it is the second oldest surviving bank in what is now the United Kingdom, and is the only commercial institution created by the Parliament of Scotland to...

, the Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

 and the Clydesdale Bank
Clydesdale Bank
Clydesdale Bank is a commercial bank in Scotland, a subsidiary of the National Australia Bank Group. In Scotland, Clydesdale Bank is the third largest clearing bank, although it also retains a branch network in London and the north of England...

). These notes have no status as legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....

; but in practice they are accepted throughout the UK. The full range of Scottish bank notes commonly accepted are £5, £10, £20, £50 and £100. (See British banknotes for further discussion).

Investment, Insurance and Asset Servicing

The first half of the 19th century brought the creation of many life assurance companies in Scotland, predominantly on the mutual model. By the 1980s there were 9 members of the Association of Scottish Life Offices but these have demutualised and most were taken over. Standard Life, based in Edinburgh, demutualised and has remained independent.

Starting in 1873 with Robert Fleming's Scottish American Investment Trust, a relatively broad stratum of Scots invested in international investment trust ventures. Around 80,000 Scots held foreign investment assets in the early 20th century.

Nowadays Scotland is one of the world's biggest fund management centres with over £300bn worth of assets directly serviced or managed in the country. Scottish fund management centres have a major presence in areas such as pensions, property funds, investment trusts as well as in retail and private client markets. Similarly asset servicing on behalf of fund managers has become an increasingly important component of the financial services industry in Scotland with Scottish based companies providing expertise in securities servicing, investment accounting, performance measurement, trustee and depositary services and treasury services.

Tourism

It is estimated that tourism accounts for 3% of Scotland's economic output. Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 is a well-developed tourist destination with attractions ranging from unspoilt countryside, mountains
Mountains and hills of Scotland
Scotland is the most mountainous country in the United Kingdom. The area north and west of the Highland Boundary Fault is known as the Highlands, and contains the country's main mountain ranges. Scotland's mountain ranges, in a rough north to south direction are: The Highlands & Islands, The Hills...

 and abundant history
History of Scotland
The history of Scotland begins around 10,000 years ago, when humans first began to inhabit what is now Scotland after the end of the Devensian glaciation, the last ice age...

. Tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...

 is responsible for sustaining 200,000 jobs mainly in the service sector, with tourist spending averaging at £4bn per year. Domestic tourists (those from the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

) make up the bulk of visitors to Scotland. In 2002, for example, UK visitors made 18.5 million visits to Scotland, staying 64.5 million nights and spending £3.7 billion. In contrast, overseas residents made 1.58 million visits to Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

, staying 15 million nights and spending £806 million. In terms of overseas visitors, those from the United States made up 24% of visits to Scotland, with the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 being the largest source of overseas visitors, and Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

 (9%), France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

 (8%), Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

 (7%) and Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

 (6%), following behind.

Infrastructure

Infrastructure in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 is varied in its provision and its quality. The densest network of roads, railways and motorways is concentrated in the Central Lowlands
Central Belt
The Central Belt of Scotland is a common term used to describe the area of highest population density within Scotland. Despite the name, it is not geographically central but is nevertheless situated at the 'waist' of Scotland on a conventional map and the term 'central' is used in many local...

 of the country where around 70% of the population live. The motorway and trunk road network is principally centred on the cities of Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

 and Glasgow
Glasgow
Glasgow is the largest city in Scotland and third most populous in the United Kingdom. The city is situated on the River Clyde in the country's west central lowlands...

 and connecting them to other major concentrations of population, and is vitally important to the economy of Scotland. Key routes include the M8 motorway, which is one of the busiest and most important major routes in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

, with other primary routes such as the A9 connecting the Highlands to the Central Belt, and the A90/M90
M90 motorway
The M90 is a motorway in Scotland. It runs from Inverkeithing, at the north end of the Forth Road Bridge, to Perth, passing Dunfermline, Cowdenbeath and Kinross on the way...

 connecting Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

 and Aberdeen
Aberdeen
Aberdeen is Scotland's third most populous city, one of Scotland's 32 local government council areas and the United Kingdom's 25th most populous city, with an official population estimate of ....

 in the east. The M74
M74 motorway
The A74 and M74 motorways form a major motorway in Scotland. Following an extension opened on 28 June 2011, it connects the M8 motorway west of Glasgow to the English border at Gretna, creating an alternative route for traffic moving from the south to the west of the city...

 and A1, in the west and east of the country, respectively, provide the main road corridors from Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 to England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

. The Scottish Executive
Scottish Executive
The Scottish Government is the executive arm of the devolved government of Scotland. It was established in 1999 as the Scottish Executive, from the extant Scottish Office, and the term Scottish Executive remains its legal name under the Scotland Act 1998...

 has stated that it intends to spend £3bn on a capital investment scheme to improve Scotland's road and rail system, over the next decade, with the setting up of a national agency in January 2006 - Transport Scotland
Transport Scotland
Transport Scotland was created on 1 January 2006 as the national transport agency of Scotland. It is an Executive Agency of the Scottish Government's Enterprise, Transport and Lifelong Learning Department and accountable to Scottish Ministers...

 to oversee this. Many roads in the Highlands are single track, with passing places.

The rail network is primarily centred on the central belt and is used principally as a means of public transport, with some freight movements - for example from the port facilities at Grangemouth
Grangemouth
Grangemouth is a town and former burgh in the council area of Falkirk, Scotland. The town lies in the Forth Valley, on the banks of the Firth of Forth, east of Falkirk, west of Bo'ness and south-east of Stirling. Grangemouth had a resident population of 17,906 according to the 2001...

 and Hunterston Ore Terminal. After a large rationalisation of routes in the 1960s, which led to station and line closures, the rail network is currently being expanded, to cope with ever increasing levels of passenger demand. The rail-operator First ScotRail
First ScotRail
ScotRail Railways Ltd. is the FirstGroup-owned train operating company running domestic passenger trains within Scotland, northern England and the cross-border Caledonian Sleeper service to London using the brand ScotRail which is the property of the Scottish Government...

 operates most routes within Scotland, with long-distance connections to London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...

 operated by National Express
National Express
National Express Coaches, more commonly known as National Express, is a brand and company, owned by the National Express Group, under which the majority of long distance bus and coach services in Great Britain are operated,...

 or Virgin Trains
Virgin Trains
Virgin Trains is a train operating company in the United Kingdom. It operates long-distance passenger services on the West Coast Main Line between London, the West Midlands, North West England, North Wales and Scotland...

. Proposals which have been mooted include the electrification
Electrification
Electrification originally referred to the build out of the electrical generating and distribution systems which occurred in the United States, England and other countries from the mid 1880's until around 1940 and is in progress in developing countries. This also included the change over from line...

 of the rail system in order to cut journey times.

In 2004, 22.6 million passengers used Scotland's airports, with there being 514,000 aircraft movements with Scottish airports being amongst the fastest growing in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 in terms of passenger numbers. Plans have been published by the major airport operator BAA plc
BAA plc
BAA Ltd. is the Spanish-owned operator of six British airports and Naples Airport in Italy, making the company one of the largest transport companies in the world. BAA stems from British Airports Authority and is owned by a consortium led by Grupo Ferrovial, a Spanish firm specialising in...

 to facilitate the expansion of capacity at the major international airports of Aberdeen, Edinburgh and Glasgow
Glasgow International Airport
Glasgow International Airport is an international airport in Scotland, located west of Glasgow city centre, near the towns of Paisley and Renfrew in Renfrewshire...

, including new terminals and runways to cope with a large forecast rise in passenger use. Prestwick Airport also has large air freight operations and cargo handling facilities. Scotland is well-served by many airlines and has an expanding international route network, with recent long-haul services to Dubai
Dubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...

, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...

, Atlanta and Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

.

Major deep-water Port
Port
A port is a location on a coast or shore containing one or more harbors where ships can dock and transfer people or cargo to or from land....

 facilities exist at Aberdeen
Aberdeen
Aberdeen is Scotland's third most populous city, one of Scotland's 32 local government council areas and the United Kingdom's 25th most populous city, with an official population estimate of ....

, Grangemouth
Grangemouth
Grangemouth is a town and former burgh in the council area of Falkirk, Scotland. The town lies in the Forth Valley, on the banks of the Firth of Forth, east of Falkirk, west of Bo'ness and south-east of Stirling. Grangemouth had a resident population of 17,906 according to the 2001...

, Greenock
Greenock
Greenock is a town and administrative centre in the Inverclyde council area in United Kingdom, and a former burgh within the historic county of Renfrewshire, located in the west central Lowlands of Scotland...

, Peterhead
Peterhead
Peterhead is a town in Aberdeenshire, Scotland. It is Aberdeenshire's biggest settlement , with a population of 17,947 at the 2001 Census and estimated to have fallen to 17,330 by 2006....

, Scapa Flow
Scapa Flow
right|thumb|Scapa Flow viewed from its eastern endScapa Flow is a body of water in the Orkney Islands, Scotland, United Kingdom, sheltered by the islands of Mainland, Graemsay, Burray, South Ronaldsay and Hoy. It is about...

 and Sullom Voe
Sullom Voe
Sullom Voe is an inlet between North Mainland and Northmavine on Shetland in Scotland. It is a location of the Sullom Voe oil terminal. The word Voe is from the Old Norse vagr and denotes a small bay or narrow creek...

. Scotland was connected to mainland Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

 by a dedicated ferry service between Rosyth
Rosyth
Rosyth is a town located on the Firth of Forth, three miles south of the centre of Dunfermline. According to an estimate taken in 2008, the town has a population of 12,790....

 (near Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

) and Zeebrugge
Zeebrugge
Zeebrugge is a village on the coast of Belgium and a subdivision of Bruges, for which it is the modern port. Zeebrugge serves as both the international port of Bruges-Zeebrugge and a seafront resort with hotels, cafés, a marina and a beach.-Location:...

. In addition to this many remote island communities on Scotland's western seaboard are served by lifeline ferry services operated by the state-owned company Caledonian MacBrayne
Caledonian MacBrayne
Caledonian MacBrayne is the major operator of passenger and vehicle ferries, and ferry services, between the mainland of Scotland and 22 of the major islands on Scotland's west coast...

, which carry tourists as well as freight and are vital to the economies of these islands.

The role of the public sector

See also: Politics of Scotland
Politics of Scotland
The Politics of Scotland forms a distinctive part of the wider politics of Europe.Theoretically, the United Kingdom is de jure a "unitary state" with one sovereign parliament and government...

, Barnett formula
Barnett formula
The Barnett formula is a mechanism used by The Treasury in the United Kingdom to adjust the amounts of public expenditure allocated to Northern Ireland, Scotland and Wales automatically to reflect changes in spending levels allocated to public services in England, England and Wales or Great...

, Fiscal autonomy


The public sector, in Scotland, has a significant impact upon the economy and comprises central government departments, local government, and public corporations. In quarter 3 of 2005, there were 577,300 people employed in the public sector, which accounts for 23.4% of employment in Scotland - this includes all medical professionals employed within the National Health Service in Scotland
NHS Scotland
NHS Scotland is the publicly funded healthcare system of Scotland. Although they are separate bodies the organisational separation between NHS Scotland and the other three healthcare organisations each commonly called the National Health Service in the United Kingdom tends to be hidden from its...

, those employed in the emergency service
Emergency service
Emergency services are organizations which ensure public safety and health by addressing different emergencies. Some agencies exist solely for addressing certain types of emergencies whilst others deal with ad hoc emergencies as part of their normal responsibilities...

s and those employed in the state education and higher education sector. This is in addition to employees of the government in the civil service and in local government as well as public bodies and corporations.

There is a clear separation of responsibility of the powers of both the UK government and the devolved Scottish Government in relation to the formulation and execution of national economic policy as it affects Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 - this is set out under Section 5 of the Scotland Act 1998
Scotland Act 1998
The Scotland Act 1998 is an Act of the Parliament of the United Kingdom. It is the Act which established the devolved Scottish Parliament.The Act will be amended by the Scotland Bill 2011, if and when it receives royal assent.-History:...

.

UK Government

The UK Government along with the Parliament of the United Kingdom
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...

 retains full control over Scotland's fiscal environment, in relation to taxation (including tax rates and tax collection) and the overall share of central government expenditure apportioned to Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

, in the form of an annual block grant
Block grant
In a fiscal federal form of government, a block grant is a large sum of money granted by the national government to a regional government with only general provisions as to the way it is to be spent...

. It also retains complete responsibility for the operation of the Welfare State, in terms of pensions, unemployment insurance and child benefit
Child benefit
Child benefit is a social security payment disbursed to the parents or guardians of children. Child benefit is means-tested in some countries.-Australia:...

 - as part of the UK-wide Welfare State exercised by the UK Department for Work and Pensions
Department for Work and Pensions
The Department for Work and Pensions is the largest government department in the United Kingdom, created on June 8, 2001 from the merger of the employment part of the Department for Education and Employment and the Department of Social Security and headed by the Secretary of State for Work and...

 and HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...

.

Scottish Government

The Scottish Government has very limited power to raise or lower the rate of income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...

 in Scotland by up to 3p in the pound, but has the power to vary business rates
Business rates
Business rates is the commonly used name of non-domestic rates, a tax on the occupation of non-domestic property. Rates are a property tax with ancient roots that was formerly used to fund local services that was formalised with the Poor Law 1572 and superseded by the Poor Law of 1601...

 and can regulate the application of local taxes such as the council tax
Council tax
Council Tax is the system of local taxation used in England, Scotland and Wales to part fund the services provided by local government in each country. It was introduced in 1993 by the Local Government Finance Act 1992, as a successor to the unpopular Community Charge...

 levied by local authorities
Subdivisions of Scotland
For local government purposes, Scotland is divided into 32 areas designated as "council areas" which are all governed by unitary authorities designated as "councils"...

 in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

. Nevertheless the Scottish Government has full control over how Scotland's annual block grant is divided between government departments, such as healthcare and education and on state-owned enterprises, such as Scottish Water
Scottish Water
Scottish Water is a statutory corporation in Scotland that provides water and sewerage services. Unlike in England and Wales, water and sewerage provision in Scotland continues as a public corporation accountable to the public through the Scottish Government....

 and Caledonian MacBrayne
Caledonian MacBrayne
Caledonian MacBrayne is the major operator of passenger and vehicle ferries, and ferry services, between the mainland of Scotland and 22 of the major islands on Scotland's west coast...

. The Scottish Government does however have control over Economic Development policy, and controls, funds and regulates the national Economic development Agency - Scottish Enterprise
Scottish Enterprise
Scottish Enterprise is a sponsored non-departmental public body of the Scottish Government which encourages economic development, enterprise, innovation and investment in business...

. In 2008, for example, the budget of the Scottish Government was around £33bn, which the Scottish Government can spend on the areas under its jurisdiction such as education, healthcare, transport, the environment and justice.

Local

The 32 unitary authorities in Scotland
Subdivisions of Scotland
For local government purposes, Scotland is divided into 32 areas designated as "council areas" which are all governed by unitary authorities designated as "councils"...

 have the ability to levy a local tax, called the Council Tax
Council tax
Council Tax is the system of local taxation used in England, Scotland and Wales to part fund the services provided by local government in each country. It was introduced in 1993 by the Local Government Finance Act 1992, as a successor to the unpopular Community Charge...

 which is used to pay for local services such as refuse collection, street lighting, roads, pavements, public parks and museums. The value of residential property is the base for the tax, with each dwelling allocated to one of eight bands coded by letters A through H (H being the highest) on the basis of its assumed capital value. Each local authority sets a tax rate expressed as the annual levy on a Band D property inhabited by two liable adults. The budget of local authorities is supplemented by direct grants
Grant (money)
Grants are funds disbursed by one party , often a Government Department, Corporation, Foundation or Trust, to a recipient, often a nonprofit entity, educational institution, business or an individual. In order to receive a grant, some form of "Grant Writing" often referred to as either a proposal...

 from the Scottish Executive
Scottish Executive
The Scottish Government is the executive arm of the devolved government of Scotland. It was established in 1999 as the Scottish Executive, from the extant Scottish Office, and the term Scottish Executive remains its legal name under the Scotland Act 1998...

.

Education

Education in Scotland is well-funded with very high levels of participation in all sectors of education. Participation in further and higher education is especially high, with Scottish universities generally being recognised as amongst the best in the teaching of medicine
Medicine
Medicine is the science and art of healing. It encompasses a variety of health care practices evolved to maintain and restore health by the prevention and treatment of illness....

, law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...

, engineering
Engineering
Engineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of...

, science
Science
Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe...

 and technology
Technology
Technology is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. It can also refer to the collection of such tools, machinery, and procedures. The word technology comes ;...

. Increasingly Scotland is being seen as an exporter of education, with the number of overseas students applying to studying at universities throughout Scotland, rising substantially in recent years. Most universities are linked with a flourishing research and development sector; the University of Dundee
University of Dundee
The University of Dundee is a university based in the city and Royal burgh of Dundee on eastern coast of the central Lowlands of Scotland and with a small number of institutions elsewhere....

 is at the heart of a biotechnology
Biotechnology
Biotechnology is a field of applied biology that involves the use of living organisms and bioprocesses in engineering, technology, medicine and other fields requiring bioproducts. Biotechnology also utilizes these products for manufacturing purpose...

 and medical research cluster; the University of Edinburgh
University of Edinburgh
The University of Edinburgh, founded in 1583, is a public research university located in Edinburgh, the capital of Scotland, and a UNESCO World Heritage Site. The university is deeply embedded in the fabric of the city, with many of the buildings in the historic Old Town belonging to the university...

 is a centre of excellence in the field of Artificial Intelligence
Artificial intelligence
Artificial intelligence is the intelligence of machines and the branch of computer science that aims to create it. AI textbooks define the field as "the study and design of intelligent agents" where an intelligent agent is a system that perceives its environment and takes actions that maximize its...

 and the University of Aberdeen
University of Aberdeen
The University of Aberdeen, an ancient university founded in 1495, in Aberdeen, Scotland, is a British university. It is the third oldest university in Scotland, and the fifth oldest in the United Kingdom and wider English-speaking world...

 is a world-leader in the study of offshore technology in the oil and gas industry. Scotland generally has a well-educated population - adult Literacy rates are at over 99%.

Health

Another major component of central government expenditure in Scotland is on healthcare and healthcare related services. The National Health Service
National Health Service
The National Health Service is the shared name of three of the four publicly funded healthcare systems in the United Kingdom. They provide a comprehensive range of health services, the vast majority of which are free at the point of use to residents of the United Kingdom...

 (NHS) is the publicly controlled provider of the majority of healthcare in Scotland, with the NHS being a major employer not only in terms of doctors nurses and other key healthcare workers, but also in terms of administration. The service is administered differently from the rest of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 and is largely free at the point of use to residents in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

, except for dental
Dentistry
Dentistry is the branch of medicine that is involved in the study, diagnosis, prevention, and treatment of diseases, disorders and conditions of the oral cavity, maxillofacial area and the adjacent and associated structures and their impact on the human body. Dentistry is widely considered...

 services where those over 18 must pay. In the short term spending on healthcare in Scotland remains high in response to the population's poor diet and high instance of heart disease
Heart disease
Heart disease, cardiac disease or cardiopathy is an umbrella term for a variety of diseases affecting the heart. , it is the leading cause of death in the United States, England, Canada and Wales, accounting for 25.4% of the total deaths in the United States.-Types:-Coronary heart disease:Coronary...

. In the medium to long term, the challenges of an ageing population are likely to increase demand for health services and put increasing pressure on the health service in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

.

Other economic indicators

Refs http://www.scotland.gov.uk/Topics/Statistics/Browse/Economy/SNAP/expstats/GDPi2010Q1

Total Population: 5,494,801 (2007 est)

Working Age Population: 2,475,386 (2007 est.)

GDP (£billion): 128,929 (2006) 143,834 (2009)

Manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...

 GVA
Gross value added
Gross Value Added ' is a measure in economics of the value of goods and services produced in an area, industry or sector of an economy...

 (£million):
28, 900 (2007)

Number of VAT
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...

 registered companies:
185,925 (2007 est.)

Number of Large Companies (250+ employees) in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

:
2,240 (2007)

Number of new homes built pa.: 24,581 (2006)

Employment
Employment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...

 Rate (% of adults of working age):
78.7 (2007)

Median
Median
In probability theory and statistics, a median is described as the numerical value separating the higher half of a sample, a population, or a probability distribution, from the lower half. The median of a finite list of numbers can be found by arranging all the observations from lowest value to...

 Gross Weekly Earnings of full-time workers on adult rates (£):
592.70

Claimant Unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...

 Rate (%):
2.1 (2007)

People of working age claiming key Social Security benefits (%): 11.7 (Feb. 2007)

See also

  • Economy of the United Kingdom
    Economy of the United Kingdom
    The economy of the United Kingdom is the sixth-largest national economy in the world measured by nominal GDP and seventh-largest measured by purchasing power parity , and the third-largest in Europe measured by nominal GDP and second-largest measured by PPP...

  • Celtic Tiger
    Celtic Tiger
    Celtic Tiger is a term used to describe the economy of Ireland during a period of rapid economic growth between 1995 and 2007. The expansion underwent a dramatic reversal from 2008, with GDP contracting by 14% and unemployment levels rising to 14% by 2010...

  • Geography of Scotland
    Geography of Scotland
    The geography of Scotland is highly varied, from rural lowlands to barren uplands, and from large cities to uninhabited islands. Located in north-west Europe, Scotland comprises the northern one third of the island of Great Britain...

  • Economy of Scotland in the High Middle Ages
    Economy of Scotland in the High Middle Ages
    The Economy of Scotland in the High Middle Ages for the purposes of this article pertains to the economic situation in Scotland between the death of Domnall II in 900, and the death of Alexander III in 1286 which then led indirectly to the Scottish Wars of Independence...

  • Council of Economic Advisers (Scotland)
    Council of Economic Advisers (Scotland)
    The Council of Economic Advisers is a group of economists and captains of industry who advise the Scottish Government. It was established in 2007, meeting for the first time on 21 September....

  • Scottish Council for Development and Industry
    Scottish Council for Development and Industry
    The Scottish Council for Development and Industry , founded in 1931, is a non-governmental, membership organisation which aims to strengthen Scotland’s economic competitiveness through influencing government and key stakeholders to create sustainable economic prosperity for Scotland.SCDI has about...

  • Scottish Enterprise
    Scottish Enterprise
    Scottish Enterprise is a sponsored non-departmental public body of the Scottish Government which encourages economic development, enterprise, innovation and investment in business...


External links

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