It is inevitable that the media should focus on Nicola Sturgeon's new role responsible for Scottish Government strategy and the constitution. The talented minister will be responsible for leading negotiations with Westminster on the referendum and piloting the referendum bill through Holyrood.
But all of that is in addition to her 'day job' as the new minister for infrastructure, investments and cities.
Alex Neil, whom she replaces, has for many years been a passionate advocate of the need for more investment to raise the long-term rate of growth. I have crossed swords with him in the past because I felt that he did not pay enough attention to the quality of investment. Investment per se is not enough. It needs to be innovative and embody new technologies. But subject to that caveat, investment in both plant and machinery, R&D and infrastructure is crucial, as well as in human capital. There is some debate about the relevant importance of each but that is an issue for another day.
If we look first at gross investment to GDP, we see in the chart below that the SNP minority and then majority government at Holyrood presided over a decline from just under 20 percent of Scottish GDP to just above 15 percent in the first quarter of this year. In the UK the share declined from a peak of just above 18 percent in 2007 to just below 15 percent in the first three months of this year. The Scottish data are drawn from the Scottish National Accounts Project (SNAP) and are experimental, with work continuing to improve the quality of the statistic. Readers - and authors! - should therefore be careful in drawing conclusions from the dataset.
Clearly, the Great Recession and its aftermath appears to be primarily responsible for the fall.
But there are longer-run trends at work.
The UK gross investment share has clearly been on a downward trend since 1998, although that does not seem to have been the case in Scotland. Andrew Smithers of Smithers & Co argues, supported by sophisticated modelling on executive compensation contracts and macro instability from the New York Federal Reserve, that the falling investment share in the US and the UK and lower future growth is a direct consequence of the growth in the corporate bonus culture. This has been particularly prevalent in financial services. One interpretation is that spending on investment reduces profits in the short-term even though it will raise them in the long term. If executive compensation is linked more to bonuses, which in turn are linked to the short-term profit numbers, then there is a built bias in the corporate reward system against investment: a perverse incentive.
Maybe the bonus culture has not developed as strongly in Scotland. It is certainly true that those parts of the financial service sector where this culture is more in evidence such as hedge funds and the shadow banking sector are less represented in Scotland. But it is certainly something that the new minister should be urging Scottish Financial Enterprise, the CBI, the IOD and other industry bodies to discourage.
The UK's record in investment is clearly not one which neither industry or government can be proud.
In the latest CIA World Factbook the UK ranks 137 out of 150 countries for gross fixed investment as a percentage of GDP. It is true the United States ranks lower at 142 but that perhaps makes Andrew Smither's point!
Net government investment in the UK is also in decline and that decline is forecast to continue due to fiscal consolidation as the chart below shows.
The situation on public sector net investment is likely to be much the same in Scotland as in the UK. Which brings me back to Nicola.
It is too easy to argue that if only Scotland can get out of the UK union everything will in the end be ok on the investment front and the wider growth of the Scottish economy. As I and others have argued, see here and here, an independent Scotland's fiscal position is likely to be no better than under the present arrangements and probably worse. Given that, it is difficult to see an independent Scottish government make a radical switch from current to capital spending. The short-term political cost would be extreme.
So, if Scotland is going to raise radically its investment spending then it is down to the private sector. Inward investment can play a role. But we note that despite recent successes the attraction of inward investment has done little to arrest the slide in the investment GDP ratio.
More demand in the economy would certainly help. But it is really down to Scottish companies being prepared to put investment spending over short-term profit. A challenge for any Infrastructure, Investment and Cities minister no matter how competent.
So, Nicola. Don't forget the day job!