The Scottish Government estimates that 94.5% of its GDP stays in Scotland.
The predominance of company headquarters outside of Scotland – not helped by the loss of many Scottish truly domiciled firms in recent decades – has meant that a higher level of profits arguably flow out of Scotland than would be otherwise be the case. Indeed, many of Scotland’s largest firms – not just oil and gas and financial services but petrochemicals, professional services and whisky – are owned outside of Scotland. So although the products or services may be made here, the income doesn’t always stay in Scotland. .
In general, foreign investment into Scotland is often seen as a good thing – and it helps companies to grow and create jobs. It’s also something that successive Scottish administrations have actively encouraged – see, for example, the hype that often accompanies the EY Report on FDI every year. However, this will also have the consequence that some of these increased earnings will flow out of Scotland as investors earn returns on their investments and therefore widen the gap between GDP and GNI..
With the rise of digital technology and major multi-national firms such as Google, Amazon and others this issue is only likely to become even more important in the future – particularly where tax revenues are involved. This ongoing data work from the Scottish Government should help to inform such debates.