Boosting the role of co-operative businesses in the economy could help Scotland compete with her fast-growing rivals, John Swinney said yesterday.

The finance and sustainable growth secretary said figures from Co-operative Development Scotland (CDS), the Scottish Enterprise-backed agency, showed that co-ops in Scotland contributed just 4.6% of GDP compared to "an average 17% in the growth economies of Finland, Switzerland and Sweden".

Swinney, who has also flagged up his enthusiasm for social enterprises, told a CDS seminar: "I believe co-ops can play a greater role in contributing to Scotland's national success and increasing sustainable economic growth. I support CDS in its aim to grow the co-operative sector and help Scotland join the Arc of Prosperity' that surrounds us."

CDS was unveiling its first year's achievements, which include the creation of 27 co-operative and co-owned start-ups with projected first-year turnover of more than £2m and 730 new business owners. It also supported 30 collaborative economic projects with a combined project value of almost £200m, including early work on a £100m Scottish Mutual Asset Fund for social economy organisations.

The Co-operative Group, the world's largest consumer co-operative society following the merger with United Co-operatives last July, has enjoyed "a considerable increase in sales and turnover" since launching a media campaign around its rebranding as one organisation, regional secretary Gerard Hill told the seminar.

Hill said: "It is not just about fascias and a logo, it gives opportunities to reinforce our social goals and what makes us different." The Co-op now has a turnover in Scotland of £629m, an operating profit of £59m, and employs 8000 in 450 trading outlets.

CDS said the number of Scottish co-operative businesses had grown by 6% in one year as a direct result of its activities to support the sector.

New start-ups include Scottish Woodfuels, Scotland's first co-operative timber company, and Western Isles Energy Co-op, set up by six community landowners to develop renewable energy.

Simon Craufurd, founder of Scottish Woodfuels, said the co-op was enabling small landowners and forestry contractors to win large contracts, such as for the NHS, which would otherwise elude them. It now hoped to extend across the whole of Scotland, and to promote the green benefits of woodfuel.

A third of last year's start-ups were "secondary" co-ops, where existing businesses combine to share resources, such as in "business rings", notably "machinery rings" among farmers. They enable assets, including labour, to be pooled and exchanged, and plans are under way for rings to share management across Scotland.

James Graham, chief executive of rural co-op support group SAOS, said it now had 80 members turning over £1.3bn, including several producer co-ops. "Cooperation proves to be one of the few dynamos of economic acti- vity and investment in rural Scotland."

Ian Hughes, chief executive of CDS, said: "All it would take for Scotland to join the Arc of Prosperity' is for four more co-ops to grow into businesses the size of First Milk, which has become the UK's leading dairy co-operative with 2600 farmer members and a turnover approaching £500m in six years. We will continue using role models like these to highlight the benefits of doing business co-operatively."

CDS is also encouraging advisers and professional service providers, such as banks, accountants and lawyers, to raise awareness of employee ownership as a viable business transfer option alongside management buy-outs and trade sales.