In Spring, celebrated political philosopher and 'father of modern economics' Adam Smith will become the first Scot to appear on an English banknote.

In Spring, celebrated political philosopher and 'father of modern economics' Adam Smith will become the first Scot to appear on an English banknote. 'Claimed' by both the political left and right as their own, the Enlightenment luminary will also be the first economist to feature on UK money.

In many ways, the timing could not be more apt. In economic terms, Smith's native Scotland is enjoying a new enlightenment which is helping the nation look outward with confidence and optimism.

When Smith, the son of a Kirkcaldy customs controller, wrote his seminal work, The Wealth of Nations, in 1776, Scotland was enjoying a cultural renaissance. Great Scottish thinkers like Smith, David Hume and Henry Home were at the forefront of an intellectual movement which was transforming the nation. When Alan Greenspan, Chairman of the US Federal Reserve, delivered the 14th Adam Smith lecture last year, he described Smith as a giant of world economics, stating that The Wealth of Nations was 'one of the great achievements in human intellectual history.' If Smith was studying the economic stability of his own land today, he would no doubt be delighted at the nation's progress and standing in the modern world.

Closing The Gap

According to the independent forecasters for October 2006, Scotland's economy is on course to deliver its best performance in nine years. Growth in both the manufacturing sector and in services has shown that Scotland's diverse economy is evolving with the pace of technological and scientific advance. Even more encouraging for a nation which makes up only 10% of the UK population is that Scotland is scaling the competitiveness ladder, closing the gap with the regions above it. These are the findings of the think-tank The World Foundation, which reports that Scotland is the only current climber in the annual UK competitiveness index, inaugurated in 1997.

What would Smith have made of this? It would undoubtedly have engendered satisfaction. He was a proponent of an inclusive and active market place and Scotland in 2006 is fulfilling the aspirations he set forth for the first time in the 18th Century.

While there is never room for complacency, Scotland nevertheless has a right to take encouragement from recent achievements. Like in Smith's enlightened age, our financial prudence and intellectual capacity for turning ideas into reality are one of the main reasons for our rising stock within the UK and Europe. Innovation is helping to make Scotland a prime location to live, research, create and do business.

Financial Success

Finance and financial services, in particular, is one area where Scotland is outstripping the rest of the British Isles. A remarkable one in twenty jobs in Scotland fall within this sector, which has grown 35 per cent in the last five years – twice the pace of UK levels. Scotland is home to two of Europe's largest banks, The Royal Bank of Scotland and Halifax Bank of Scotland, and it is now one of the most important financial centres in Europe. In December 2005, Scotland's GDP stood at £82 billion. October's Scottish Executive statistics suggest that sum has risen a further 2.2 per cent. A massive 6 per cent of total GDP comes from financial services alone – something First Minister Jack McConnell recently referred to as 'a stunning record of success.'

Glasgow and the Clyde are providing new sources of optimism. Smith studied and lectured at Glasgow University but the city of today would be unrecognisable to him, especially the docklands by the river. Glasgow's International Financial Service District, known as 'Wall Street on the Clyde' is a major success story and is transforming an area once scarred by the decline of passing industries. Since its 2001 launch, the project has attracted over £600 million of investment. With more Grade A office space here than anywhere else in the UK outside London, it is little wonder major players like JP Morgan Chase, Morgan Stanley and Goldfish have bought into this vision of regeneration and development. Scotland has also reported a 40 per cent rise in the last decade in the number of graduates in the workplace, ensuring a skilled work force to satisfy growing demand.

The Knowledge Economy

For several decades, Scotland has been moving away from the traditional heavy industries which were once the bulwarks of the economy to a broader based model, embracing the latest technology, science and discoveries. When Smith was writing, Scotland was examining and stretching new production ideas. The nation is once again becoming a hotbed for innovation, encouraging international brains to work here and forging imaginative links between academics, governments and businesses to help thousands – something Smith felt a thriving market should achieve.

For any knowledge economy to flourish, analysts believe a quality research base is vital. In the fields of technology, creative and life sciences, Scotland is breaking new ground. Indeed, we have one of the fastest growing life science communities in Europe. There are scientists of international repute working in neuroscience, drug research and diabetes in this country. 20 per cent of the UK's Microbiology PhDs are in Scotland. 20 per cent of all money spent on UK clinical research is spent in Scotland. To fully understand the esteem in which our research centres are held, you only need to look at the recent £50 million partnership between our largest four Universities and Philadelphia-based Wyeth Pharmaceuticals.

Based at Dundee University, the Scottish Translational Medicine Research Collaboration will use special proteins called biomarkers to identify potential new treatments for serious illnesses. This partnership could make Scotland a world leader in personalised medicine. Frank Walsh of Wyeth Research said:"Translational Medicine is key to the successful development of the next generation of innovative medicines which will truly make a difference for patients the world over." Thanks to an Inverness-based organisation, Highland Innovation Centre Ltd, women will also soon be able to buy a breast monitoring device for use at home, to help detect cancer early.

In other knowledge sectors, Scotland punches above its weight. In Optoelectronics, Scottish researchers are the 7th most quoted in the world. Two of the world's top ten Telecoms equipment manufacturers are Scottish – Cisco Sytems Ltd and Lucent Technologies. Digital media and Creative industries make up 4 per cent of our GDP, with Scotland boasting an international reputation in multimedia and games production.

Growing Workforce

As is often the case, success breeds success. Scotland has enjoyed the benefits, in employment terms, of being able to attract top companies to these shores. Creators of the iPod, Apple, are set to open their first Scottish store, in Glasgow, next year. The luring of such a global brand will enhance Buchanan Street's reputation as one of Britain's leading retail locations. The renaissance of the Clyde Waterfront is expected to deliver 50,000 new jobs and US firm Goodrich expansion plans will employ 500 workers at its extended aeronautical operation at Prestwick Airport. Shell, too, are proposing 100 new jobs at their financial shared service operation in Glasgow while BskyB will take on 250 new employees in Livingston. These developments are welcome at a time when Scotland is already bucking the UK trends in employment statistics.

Tourism is another growing sector and one in which there is still much potential to be tapped. Tourism-related industries account for 10 per cent of our GDP and, in 2005, over 17 million tourists visited Scotland, spending over £4.2 billion.

The world's largest travel company, TripAdvisor, recently ranked Ayr as 3rd in the world's top 10 destinations behind Pamukkale in Turkey and Parga, Greece. Buachaille Etiv Mor in Glencoe has just been named in the top 10 of the world's greatest views in a survey compiled by Australian wine brand, Jacob's Creek, and a survey by Cognac producer Remy Martin lists Edinburgh as the best UK city in which to dine, after London.

A Fresh Approach

All of these elements point to a robust and flexible economy but one of the concerns of the past has been a declining population. Fortunately, Scotland has extended its hand of friendship to new populations. Thanks to Scotland's proactive approach, migration to Scotland is historically high. More graduates than ever are choosing to stay in Scotland, after graduation. The Scottish Executive's Fresh Talent initiative welcomes immigrants of skill and of ambition to live and work in Scotland. More than 400,000 people have visited the website www.scotlandistheplace.com and the Relocation Advisory Service has attracted more than 12,500 enquiries in its first two years. Home Office records suggest 37,570 people have come to Scotland from eight European accession states; 22,000 from Poland – effecting the biggest immigration boost in 50 years. The brain drain from Scotland is being reversed, and Scotland's population has now risen for three years in a row. This has had a positive impact on the Scottish economy, as well as fostering greater cultural diversity.

Scots have always had a reputation for being canny and industrious. Maybe now we are gaining more respect for the knowledge which underpins our economic thinking – a knowledge given voice, first by Smith, and now carried on by business leaders who are generating new wealth and confidence in our country. It will be a source of pride to many, therefore, that there is a leading Scot on the Bank of England £20 note and an economist, at that.

Further Information:

Courtesy of Scottish Government - Scotland.org .