Here's a question. What makes the Abbey a national theatre? Is it its Irishness? Its global sensibility? Its popularity? Its guarantee of quality? It might be all of these things. It might be none of them. The last show I saw there was A Whistle In The Dark, directed by Conall Morrison during the Dublin Theatre Festival. Certainly, it was Irish. Certainly, it was very good. Certainly, judging by the packed auditorium, it was very popular.

But will anyone argue that Tom Murphy's play is more Irish than any play they might put on up the road, at the Gate? Will anyone argue that the production was of a quality no other company in the Republic could have equalled? Will anyone argue that its box-office receipts would exceed, say, those of a popular hit at the Gaiety? Probably not. The reason is that, like a nation, a national theatre must exist at least partly in the imagination.

The idea of a national theatre is not rational, it's romantic. It exists because we want it to exist. Look at it too hard, ask too many awkward questions, and it disappears before your eyes. Suddenly, the Abbey is a theatre like any other. Just some building, putting on plays. But give it some history, some purpose, some higher reason than bricks, mortar and government cash, and a national theatre it will be.

Now take a step back. Imagine trying to set up a national theatre for the first time. Not, like Lady Gregory, W.B. Yeats and J.M. Synge, at the start of the 20th century but now, at the start of the 21st century, when it's hard enough to say what theatre is, let alone define its place among film, television, the Internet and computer games. What would such a theatre be? What would it look like? What purpose would it fulfil? What part of the imagination would it occupy?

These are the questions that have been taxing the theatre community in Scotland. This country of five million has many a national organisation - Scottish Ballet, Scottish Opera, the Royal Scottish National Orchestra, the National Galleries of Scotland - but it has never had a national theatre.

It's not for want of trying. The stories are legion of the companies that aspired to national status, from the Scottish National Players, an amateur group inspired by the Abbey in the 1920s, to the Scottish Theatre Company, a professional touring group in the 1980s. But one way or another, it never worked out. Until now.

Earlier this year, the Scottish Arts Council accepted the broad recommendations of an independent working group report on the feasibility of such a body. The council then put a "strong case" for extra funding to the Scottish Executive, the government in Scotland for all devolved matters, to ensure the project's success. The executive, which in its cultural strategy had already expressed a desire for a national theatre, is expected to respond - and to respond positively - early in the new year.

So why the change? Although the establishment of a Scottish parliament, in 1999, helped to get the idea moving, it was a change of tactics by the theatre lobby, in particular the Federation of Scottish Theatre, that made the difference.

What's new is a vision of a national theatre quite unlike any seen before, in Scotland or anywhere else. It is not about proscenium theatres and temples of culture, it is not about grand places for the great and the good to be seen, it is not about pomposity and pretension. It is about art. It's about Scottish theatre as it is now and as it could be with greater state support.

There will be no building. No monolith. No cash-guzzling mausoleum. No shrine to an earlier generation's vision of what theatre is. Instead, there will be an organisation. It will be not a performing company but a small administration with an artistic director fulfilling a role not unlike that of a festival director.

Think of how Fergus Linehan, the director of the Dublin Theatre Festival, commissioned Enda Walsh to direct his own play, Bedbound, last year. The writing, direction and acting were excellent, but it was too short, too intense, too odd to expect a conventional production. Now imagine the director of a national theatre behaving the same way.

Imagine the whole of Scottish theatre being the director's resource. The national theatre could team a playwright from Inverness with the production department of the Tron Theatre, in Glasgow, and a director from Lithuania. It could take note when the tiny island Mull Theatre did a brilliant show and invest in it, so it could be seen on bigger stages in other places. One week Dundee Rep would be the Scottish national theatre, the next it might be Edinburgh's Royal Lyceum.

The beauty of the scheme is its recognition that Scotland already has a national theatre in the sum of its existing buildings and companies. The proposed national theatre wouldn't compete with the industry, draining it of money and resources, but enhance it, celebrate it, be proud of it.

It's significant that the Scottish Arts Council proposal insists not only on an annual £1.2m for the national theatre itself, but also on an annual £1m to enhance the theatre at large. There's no point in having a company that celebrates the theatre of the nation if there is little theatre left to celebrate.

Unlike previous proposals, the plan tackles head-on the two questions that the phrase "national theatre" conceals: whose nation and whose idea of theatre? If the Scottish national theatre were to be a building, it would most likely be in Edinburgh. If that were the case, it would be metropolitan, not rural; bourgeois, not working class; them, not us. Perhaps that could be overcome, but the question of what constitutes theatre is more vexing.

Take three of my most memorable Scottish theatre highlights: a night-time trek up Glen Lyon, a promenade performance in a "haunted" underground street and a community production in Dundee about a local factory closure. All were exceptional, but they would have no place in a proscenium theatre in Edinburgh, depending too much on the places where they were made. How thrilling to imagine a national theatre inclusive of talent in all shapes and forms.

Even in tandem with the Peacock studio, the Abbey specialises in only one type of theatre; it's not built to do anything else. It happens to be a very fine type with a very fine pedigree, so nobody objects. In Scotland, however, there is the chance to do all that and more, ironically because no theatrical tradition was ever strong enough to dominate the others.

"We don't have a Shakespeare and we don't have a 20th-century creation as the Irish have," says Donald Smith, who chaired the independent working group. "This plan turns that to our advantage. It'll be experimental and innovative. It'll create arenas for questioning. And that's creative."

Where Ireland has a formidable playwriting tradition, one carried vigorously on to the present day, Scotland lacks the iconographic inspiration of a Shaw, a Synge or an O'Casey. From the same era, Scotland can boast only J.M. Barrie, the author of Peter Pan, and James Bridie, whose plays The Anatomist and Mr Bolfry are occasionally revived but are hardly world-class examples of the form.

It means that although there have been many talented Scottish playwrights - particularly impressive current practitioners include David Greig, Liz Lochhead, Chris Hannan and Iain Heggie - it's hard for them to feel part of any movement older than a decade or two.

A national theatre that attempted to enshrine a repertoire of Scottish plays, as has been attempted in the past, would seem anachronistic. Better an organisation that took a more honest view of a nonetheless buoyant theatre scene.

"The one issue that caused no discussion or controversy in the working-party consultation was repertoire," says Smith. "There was a total sense of confidence that in Scotland we have a mix and could embrace all the aspects of that mix."

If the Scottish Executive gives its backing, a Scottish national theatre will be established next year, celebrating a diverse theatrical landscape in all its wayward glory and yielding its first fruits in 2003.