A cost-benefit approach to the evaluation of regional selective assistance

The ‘Green Book’ and the recent EGRUP report support exchequer cost per job as a key input in the ex-ante appraisal of individual applications for Regional Selective Assistance (RSA) and the ex-post evaluation of the RSA scheme as a whole. In this paper, following a recommendation in the House of Commons Trade and Industry Committee’s report on regional policy, the merits of an alternative, explicitly cost-benefit, framework are outlined. This approach incorporates the administration and compliance costs of the subsidy, costs at present ignored in RSA evaluation studies. An optimal ex-ante appraisal rule is developed. This takes the form of a cost-per-job ceiling, and a representative value is calculated for this figure.

Measuring wellbeing in Scotland : the Oxfam Humankind Index

This paper describes recent work by the Fraser of Allander Institute (FAI) which constructs an index of wellbeing in Scotland. The issue of wellbeing has been extensively discussed in the economics literature on happiness, and wellbeing indices have been assembled for other counries. However, this is the first attempt to measure wellbeing in Scotland. The overall aim of the research is to identify in detail what people in Scotland believe affects their wellbeing and to construct an overall measure. The Scottish results are clearly interesting in that they identify the priorities that people in Scotland have in terms of wellbeing or happiness. A key finding is the relatively limited role that economic variables appear to contribute to wellbeing, Having secure work and suitable work and having enough money to pay the bills both ranked as joint fifth in the list of elements affecting wellbeing, reinforcing arguments made in the 2009 Sarkozy report, the broad thrust of which was that govermnent policy should focus less on creating economic growth and more on those areas which people identify as increasing wellbeing. A wellbeing index itself is clearly also a useful policy tool – for example, it allows us to assess how the government is performing in succesfully addressing issues which people in Scotland have identified as increasing wellbeing. A good example of this is when we compare health and safety. The index shows that while both being in good health and feeling safe in the local community contribute significantly to wellbeing, the performance on health far exceeds the performance on safety

Capturing the Overall Economic Impacts of HEIs

University of Strathclyde were commissioned on behalf of the Tripartite Advisory Group (TAG) on higher education in Scotland to evaluate the current state of knowledge on the overall impact of higher education in Scotland. The Strathclyde report examines evidence from Scotland, UK and international studies to draw conclusions about the impact of HE on the Scottish economy

Policy spillovers in a regional target-setting regime

The present UK government has introduced a decentralised, target-driven framework for the delivery of regional policy in England. This paper analyses the operation of such a regime when there are spatial spillovers about which the government is uninformed. It stresses the simple idea that spillovers in such a setting normally lead to a sub-optimal allocation of policy expenditures. A key result is that the existence of negative spillovers on some policies generates expenditure switching towards those policies. The extent of the expenditure switching is related to a number of factors: the size of the spillovers; the initial policy weights in the government's welfare function; the number of agencies; the extent of their knowledge of spillovers; and their degree of collusion. Such expenditure switching is generally not welfare maximising

Exploring key economic sectors and groups of sectors in Scotland; 1998, 2004, 2007

Different methods and criteria exist for determining ‘key’ economic sectors. The Scottish Government identifies a number of ‘key’ sectors, although it is not clear which metrics it used to choose these. It is likely that these sectors are considered to be ‘key’ in delivering the Scottish Government’s policy priorities. This differs from a more formally defined economic approach to determining key sectors. However, even within the economics literature, there are different ways of thinking about which sectors are ‘key’. This short paper presents one approach to determining individual and groups of ‘key’ sectors. We will explain why these approaches are not necessarily equivalent, and what value is added in moving from considering sectors individually to analysing the impact of sectors in groups. We begin with a non-technical overview of the methods we employ, before discussing the database used in this analysis. We then present the results of applying this method for Scotland for three time periods: 1998, 2004, and 2007. We mainly focus on sectoral output, but we also include one set of results which look at key employment sectors. In the discussion of our results we concentrate on two things. First, we are interested in which sectors are identified as important in Scotland in each time period. Second, we investigate how those sectors have changed between 1998, 2004 and 2007

The electricity generation mix in Scotland : the long and windy road?

This article reports on research funded by the Engineering and Physical Sciences Research Council (EPSRC) at the University of Strathclyde

The Efficiency of Decentralised and Devolved Government: A Framework

A wide range of geographically decentralised governance structures exists across countries (Ter-Minassian, 1997). These differences in administrative and constitutional mechanisms come about, at least partly, by historical accident and wider political factors. However, in this paper we focus on the more narrowly defined efficiency implications of such arrangements. This is useful for identifying the motives that might underlie particular administrative set ups and the possible efficiency losses associated with specific forms of decentralisation or devolution. In particular, we develop a framework that allows a comparison of the effectiveness of implementing policy through three alternative systems. These are: a centralised; a decentralised; and a fully devolved structure. In this analysis we build on the work of Canes-Wrone et al, (2001) and Maskin and Tirole (2004) on representative democracy. The novelty is that we place this analysis in the context of a potentially decentralised or devolved regional administration. We find that the choice of appropriate administrative form depends upon the degree of homogeneity between regions, the relative efficiency of regional decision makers and their time discount rate.

Flaws and myths in the case for Scottish fiscal autonomy

Paper argues that some of the claimed advantages of fiscal federalism "may not be as robust as asserted by its proponents". The incentive of retained tax revenues would be no greater under fiscal autonomy than under forms of fiscal federalism or decentralisation. It is an assumption that the return of higher tax revenues would provide an incentive to Scottish politicians to promote growth. "There is a lack of empirical evidence that the pursuit of higher revenues and expenditure is a paramount concern for sub central governments." The case for fiscal autonomy implies that local politicians are forward-looking and have low time discount rates, "not a characteristic normally associated with the practice of politics"