A joint report by Professor Mariana Mazzucato of the UCL Institute for Innovation and Public Purpose (UCL IIPP) and Future Economy Scotland co-founder Laurie Macfarlane and has set out a framework for a “mission-oriented industrial strategy for Scotland.”

The report finds that while Scotland’s economy has many strengths, a chronic problem of low investment has undermined living standards, hampered productivity growth, and held back Scotland’s net zero transition.

It recommends that the Scottish Government moves away from acting primarily as “lender of last resort” bailing out struggling firms and instead embraces a role as “investor of first resort.”

As other countries across the world implement ambitious industrial strategies, the report argues that Scotland cannot afford to rely on “reheating old orthodoxies.”

Instead, it calls on the Scottish Government to embrace a “mission-oriented” approach to industrial strategy – replacing traditional, sector-focused strategies with cross-sectoral “missions” that address major societal challenges.

The focus of Scotland’s new industrial strategy should be on “system-wide transformation” rather than supporting a small number of sectors.

The report recommends that the Scottish Government:

• Moves away from acting primarily as “lender of last resort” bailing out struggling firms, and instead embraces an “investor of first resort” role – investing proactively to nurture new technological and industrial landscapes
• Promotes greater coordination between policies such as procurement, subsidies and innovation funding, as well as institutions such as Scottish Enterprise and the Scottish National Investment Bank
• Creates a new social contract between government and business by attaching conditions on private sector access to state funding, and taking equity stakes in major projects
• Strengthens capabilities within Scotland’s public sector to reduce reliance on private consultancy firms
• Creates new governance models to break government silos and drive a mission-oriented industrial strategy across the Scottish Government

The framework also features a cross-cutting focus on skills, infrastructure and the foundational economy, with Scotland’s Fair Work agenda being embedded throughout – including meaningful input from trade unions, impacted communities and business.

A second forthcoming report will assess how industrial strategy can be most effectively implemented across four pillars: coordinating policy tools, transforming public institutions, strengthening public sector capabilities, and monitoring and evaluation.