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  1. Politics
6 March 2000

Let’s follow the American model

New Statesman Scotland - For too long, economic growth in the Highlands has been stunted by

By James Hunter

Imagine Inverness and the wider Highlands in 2050. Imagine the town and its surrounding area are, by this point, every bit as successful – economically and otherwise – as any part of Britain. Far-fetched? Not particularly. Certainly no more far-fetched than it would have been to postulate in 1990 that Inverness, ten years on, might have a football team capable of knocking Celtic out of the Scottish Cup.

The essential starting-point, in this regard, is a region on the other side of the world: a region bounded to the south by California; to the north by British Columbia; to the west by the sea; and to the east by the Rocky Mountains. Comprising Washington State, Oregon and Idaho, this region is known in America as the Pacific North West. Its climate, like that of the Highlands, is benign. Its scenery, like that of the Highlands, is outstanding. And had I been writing 40 or 50 years ago, I would have described the Pacific North West’s population as, like that of the Highlands and Islands, comparatively small. I might also classify the Pacific North West’s economy as one that, like that of the Highlands, remained seriously underdeveloped. During recent decades, however, the population of the Pacific North West has soared and the region’s economic prospects have changed hugely for the better.

Something of the nature of this transformation is evident from the achievements of the greater Seattle area, the Pacific North West’s foremost urban district and a locality whose population has grown by more than 60 per cent since 1970. In the mid-19th century, when the several thousand inhabitants of the then 700-year-old town of Inverness were acquiring rail links with the south, Seattle did not exist. Even 20 or 30 years later, when Seattle was taking shape as a logging settlement on the eastern shore of Puget Sound, Inverness was the more significant centre of the two. But that has long ceased to be the case. Both economically and population-wise, Seattle outpaced Inverness before the 19th century’s end. And today, as a result of the Pacific North West’s runaway success in selling itself as an ideal place in which to live and do business, the disparities between Inverness on the one hand and Seattle on the other have become enormous. But there is nothing to stop Inverness and the Highlands, in the 21st century, aspiring to the status of an Atlantic North West – the Scottish equivalent of the Pacific North West.

Summarised thus, the exercise I’m advocating seems next to impossible. The greater Seattle economy alone is larger than the Highlands and Islands economy – never mind the Inverness one – by a substantial multiple. And Seattle’s economy is of a tremendously high quality. That economy contains, for instance, Microsoft – by far the largest computer software company in the world. But the Seattle economy also contains – and this is what offers continuing growth potential – more than 2,200 other software firms, to say nothing of several thousand other new and expanding enterprises in highly innovative fields such as electronics, biotechnology, medical equipment and environmental engineering.

We are a long way short of having a Seattle-style economy in Inverness and in the rest of the Highlands. But we do have the foundations on which a Seattle-style economy might be constructed.

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To advocate making an Atlantic North West of the Highlands is to confront what Tony Blair has called the “forces of conservatism”. Those forces are nowhere more evident than in our unwillingness to picture a Scotland organised in such a way as to equip our country with commercial and industrial centres sufficiently dynamic to challenge the economic dominance exercised, for 200 years now, by the Central Belt. Postulate a mid-21st-century Scotland in which the Highlands are as significant economically as Lanarkshire or the Lothians and you’re likely to be treated, especially in Edinburgh, with the mildly indulgent condescension that metropolitans always reserve for provincials with big ideas. But why? Other nations are accustomed to the notion that yesterday’s problem region might be tomorrow’s economic generator. What makes that notion so unimaginable here?

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Consider the United States. A vital contributor to keeping the US at the forefront internationally, for much of the past century, has been the frequency with which Americans have revolutionised their economic geography. Over and over again, localities that were previously on the margins have been transformed into growth centres: California during and after the second world war; the south in the 1970s; and, most recently, the Pacific North West. What’s been true of the US may just be beginning to be true of the European Union, too – witness the way in which the formerly moribund economies of Spain and Ireland are currently expanding.

Within the more limited confines of Scotland, however, we remain extraordinarily reluctant to envisage the possibility that the pattern of overall economic activity might be other than the one to which we have long been accustomed. The Scotland that took shape in the course of the industrial revolution – a Scotland in which a booming and densely urbanised Central Belt became flanked, to the south and to the north, by depopulating rural hinterlands – is so embedded in our national consciousness that most of us take it for granted that no other dispensation is conceivable. Policy has long been shaped accordingly.

When nemesis overtook the enterprises – coal, steel, shipbuilding and the rest – on which Central Belt prosperity was originally founded, no thought was given, as it would have been in America, to the option of fostering new activities in new settings. Instead it was assumed – as it is mostly still assumed – that, despite there being no very good reason, in the age of the Internet, for sticking with a population distribution dictated largely by the resource requirements of Victorian heavy industry, business must forever remain concentrated in the places where it has been customarily located. From a Highlands and Islands standpoint, at any rate, the time has come to challenge this assumption; to insist that the Highlands and Islands are every bit as well equipped – in some respects better equipped – than any other part of Scotland to capitalise on the opportunities opening up in consequence of the changing nature of the Scottish, British, European, indeed global, economy.

Of interest in this regard is the thinking of one of Blair’s favourite gurus, Charles Leadbeater. In his recent book, Living on Thin Air, he wrote: “We are all in the thin-air business these days. It is slightly frightening to work out just how little supports most of our livelihoods. In the past, people made their living by extracting ore, mining coal, making steel, manufacturing cars, bringing cattle to market . . . Work was hard physical labour . . . The output of this labour could be weighed on scales, shipped in railway cars, measured with rules, stockpiled. These days, most people in most advanced economies produce nothing that can be weighed: communications, software, advertising, financial services. They trade, write, design, talk, spin and create; rarely do they make anything. The . . . real assets of the modern economy come out of our heads, not out of the ground: ideas, knowledge, skills, talent and creativity.”

From a Highlands standpoint, it is impossible to overestimate the significance of the state of affairs that Leadbeater describes. When the British economy depended on materials such as coal or iron ore; when that economy consisted primarily of mines, shipyards, locomotive works, heavy engineering plants; when workers had to be concentrated in large cities; when ease of physical communication mattered above all else; when distance was an insuperable barrier: when all of that applied, the Highlands were at a great disadvantage. In the new economy – driven increasingly by information and computer technology, and in which more and more people are living, as Leadbeater says, on thin air – many of the disadvantages under which we laboured previously have been rendered irrelevant. Hence the extent to which the Highlands and Islands are already being transformed: by an expanding economy now employing 40 per cent more people than were employed in the region 30 years ago; by population growth – fuelled largely by inward migration – which has resulted in total Highlands and Islands population rising by 20 per cent since the mid-1960s and which has seen several localities, such as Inverness and Skye, gain people at far higher rates.

To anyone with a sense of Highlands history – a history bound up with the continuous fall in our population from the 1840s to the 1960s – those demographic statistics are as heartening as they are remarkable. During the past 30 years, a period when the population of Scotland as a whole was static or even in decline, Highlands and Islands population went up by a fifth. The fortuitous discovery of North Sea oil had something to do with that. But of much greater significance currently is our diversification into this life on thin air that the knowledge economy is starting to make possible. Thousands of Highlands and Islands jobs are already dependent on high-tech manufacturing, on Internet service provision, on website design, on telecommunications-based activities of one kind or another. More such jobs will be created. A University of the Highlands and Islands will soon be a reality. Our rate of business start-ups, which has for some time been above the Scottish average, will hopefully increase further.

Given the possibilities that new technologies are opening up in the north of Scotland, and that the area has cornered a large slice of a commodity in huge and growing demand internationally, namely a highly attractive and relatively unspoilt natural environment, the notion of the Highlands and Islands as an Atlantic North West begins to acquire more solidity. Inverness and its hinterland possess many of the attributes that have underpinned the Pacific North West’s success. At last we are beginning to glimpse just what, in the not too distant future, those attributes might enable us to accomplish.

James Hunter chairs the board of Highlands and Islands Enterprise. This essay is extracted from a lecture he is to deliver at Inverness College on 6 March