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What is Social Economy?

The ‘social economy’ is an internationally accepted concept which identifies economic activity
undertaken by organisations with characteristics such as voluntarism, non-profit-distribution, cooperation, mutual benefit, and community service. It forms a ‘third sector’ of the overall economy, complementing the public and private sectors.

It is, however, a broad and sometimes ill-defined sector. The research, undertaken for HIE by ERM Economics, provides an innovative analysis of the social economy, using a comparatively narrow definition for the purposes of examining the sector as it exists in the Highlands and Islands. This definition, which w as an important part of the work, excludes work undertaken by quasi-governmental bodies (such as LECs and Health Trusts) at one end of the spectrum, and the work undertaken by small local community groups for purely social reasons (such as informal amateur sports clubs) at the other.

The bodies which comprise the social economy by this definition are distinguished by the fact that they trade, and reinvest any profits in the communities from which they originate, rather than distributing them to individuals or shareholders. It should be emphasised that this is not a sector in the normal sense, like forestry or agriculture, but is a method of delivery, which has a place alongside the public and private sectors, and, like them, is highly diversified. The researchers identified a least 40 categories of economic activity in which this sector was active.

(This article is by Highlands and Islands Enterprise)



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