Ownership of companies in Scotland

Baird, Sandy and Foster, John and Leonard, Richard (2004) Ownership of companies in Scotland. Quarterly Economic Commentary, 29 (3). pp. 45-53. ISSN 0306-7866

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In the August 2004 Quarterly Economic Commentary Brian Ashcroft raised important questions about corporate structure in Scotland and how far it can be characterised as unduly dominated by a few very large firms. This claim, advanced in the Royal Bank of Scotland's (RBS) study Wealth Creation in Scotland (May 2004), rested on calculations that allocated to value added within Scotland all income from employment and profits generated by companies that were registered or headquartered in Scotland. In fact, as Ashcroft argues, Scotland's largest companies tend to have a majority of their workforce employed outside Scotland. Recalculating value added in Scotland to take account of this produces a significantly different picture. With the giant firms cut down to size – particularly the two big banks and the energy companies – Scotland's corporate profile falls more into line with that of other smaller European countries. This paper seeks to raise, in an explorative way, questions about another aspect of the Royal Bank argument: the assumption that all these firms can be treated as "Scottish" and their performance – compared with that of firms in Finland or Belgium - used as the key indicator of the health and competitiveness of an entity described as the "Scottish economy".