Attracting global investment in a competitive and innovation-led market
Writing for Scottish Business Insider, Scottish Enterprise's Director of Global Investment, Mark Hallan, assesses Scotland's inward investment strengths
Scotland’s reputation as an ideal location for global companies to locate, grow, invest and innovate is well recognised and longstanding.
I’ve been privileged to work in international trade and investment for more than two decades. I know the effort that has gone in by my colleagues, and our partners across the public and private sectors, to develop a compelling proposition for our country that’s attractive to those who live and work beyond our borders.
My roles have also given me the opportunity to speak with countless international businesses, investors and organisations over the years, who have been struck by what Scotland has to offer and the opportunities available.
Despite this, time stand stills for no one, not even Scotland.
An already fiercely competitive marketplace, attracting inward investment has become even more challenging. More nations and regions are committing ever increasing resources to secure a decreasing number of investment projects.
International events such as COVID-19, Russia’s illegal invasion of Ukraine and stubbornly high inflation rates have further restricted global growth. For example, the OECD predicts global GDP growth in 2023 will be 2.7%, the lowest annual rate since the global financial crisis, with the exception of the 2020 pandemic period.
That makes the recent announcements from EY and Scottish Development International (SDI) all the more satisfying.
EY’s latest Annual Attractiveness Survey showed Scotland remained the most attractive location in the UK outside of London for Foreign Direct Investment (FDI). The influential and independent study showed that a record 126 inward investment projects were secured by Scotland in 2022, a 3.3% increase compared to 2021 when 122 FDI projects were attracted to the country.
This helped Scotland to increase its share of the total FDI projects attracted by the UK, from 12.3% in 2021 to 13.6% in 2022.
EY’s figures, which cover the calendar year January-December 2022, aligned with our own SDI figures that showed that more than 8,500 planned real living wage jobs were generated through inward investment in FY22/23, the highest number of planned jobs secured since FY18/19.
The figures, which combine inward investment projects supported by SDI, Scottish Enterprise, Highlands and Islands Enterprise, South of Scotland Enterprise and Skills Development Scotland, strike a balance between welcoming new and innovative projects into Scotland and safeguarding jobs and supply chains created by our existing investors, who continue to be an important part of Scotland’s success story.
So, how has Scotland remained so competitive at attracting global investment?
From a strategic point of view, three things have helped: playing to Scotland’s strengths, focusing on our values and adopting a ‘Team Scotland’ approach to promote the very best our country has to offer.
Using Shaping Scotland’s Economy, the Scottish Government’s inward investment strategy as our starting point, we have focused our activities on delivering projects in opportunity areas where Scotland is a genuine world leader.
Crucially, these sectors, such as offshore wind, continue to enjoy global growth. Indeed, Energy Transition was the most common type of inward investment project supported by Scotland’s enterprise and skills agencies in the past year, demonstrating our strengths in this sector.
Scotland’s values have also been at the forefront of our offering to the investors. We have promoted Scotland as a values-led inward investment destination, promoting wellbeing for individuals, communities and the wider world. These values include a commitment to climate change, the provision of fair work, and inclusive economic growth.
For example, Scotland’s commitment to net zero has been underlined by international companies choosing to develop their innovative, low-carbon projects here. Only recently, Japanese firm Sumitomo Electrical Industries (SEI) announced plans to develop a power cable facility in the Scottish Highlands to support the growth of the offshore wind sector.
Meanwhile, our unique ‘Team Scotland’ approach to attracting inward investment, which sees the public sector work together with academia and industry to promote the very best Scotland has to offer, is unrivalled. Indeed, businesses have told us that this joined up approach was a key reason why they chose Scotland over other locations.
But above all else, it is Scotland’s world-class resources that continue to make us a magnet for global investment.
Our incredible workforce, world-renowned universities, competitive cost base, supportive business environment, magnificent natural resources and the unparalleled quality of life on offer, means Scotland is always on the radar of potential investors.
And the wide impact these investors have on Scotland’s economy is significant.
Recent Scottish Enterprise research showed that the 8,500 planned jobs created or secured through SDI-supported inward investment projects in FY22/23 could potentially generate direct Scottish Income Tax of almost £115 million over a three-year period.
The research also showed that when wider impacts in the Scottish supply chain (indirect impacts) and employee spending (induced impact) are included, the planned jobs secured have the potential to support an additional 7,500 jobs for the Scottish economy.
So, the benefits are clear. Inward investment not only delivers high-quality, well-paid jobs, but can also act as a catalyst to accelerate innovation in fast-growing industries, as we will hopefully see in Scotland’s space sector following the US satellite communications company Mangata’s investment in Prestwick.
Scotland should be rightly proud of its long and established track record in relation to inward investment. Through an agile and evidence-based approach, that success continues today.
While we will not become complacent and there remains hard work to be done, we are confident Scotland will continue to attract global investment, helping deliver the transformative economic growth that we all want to see.
Mark's editorial was initially published by Scottish Business Insider on Friday, 30 June, 2023. You can view this here: https://www.insider.co.uk/news/attracting-global-investment-crucial-competitive-30358789