A bright future for inward investment in Scotland

There appears to be a renewed spring in the collective step of Scotland.

Whether it’s the departure from lockdown being in sight, the continuing roll-out of the COVID-19 vaccination programme or the longer – and occasionally sunny - days now upon us after a seemingly endless dark winter, hope and optimism are in the air.

And that positive outlook has been enhanced by Scotland’s continued ability to attract global inward investment.

In the past couple of weeks, several international companies have signalled their commitment to our towns and cities, bringing investment and high-quality jobs.  These include:

• US space firm, Mangata Networks, who will anchor its European operations in Scotland after it announced plans to open an R&D Centre in Edinburgh, generating an initial 38 jobs with further investment, growth and employment opportunities in the pipeline

• Life sciences giant LumiraDx will establish a global health research, development and manufacturing hub, which will see at least 500 new jobs created in Scotland over the next three years

• London-headquartered hydrogen technology company, Arcola Energy, will deliver 135 jobs in Dundee after announcing plans to locate at Michelin Scotland Innovation Parc (MSIP)

• Austrian tech company, SWARCO eVolt, will also move into the former Michelin site in Dundee after it secured the ChargePlace Scotland network contract, creating 18 new jobs

Scottish Enterprise has been delighted to support these businesses who chose to invest in Scotland because of our incredible talent, competitive cost base, world-class universities and supportive business environment.

These announcements underline the critical importance of inward investment to Scotland’s economy and the role it will play in our green-led recovery from COVID-19.

Inward investment is all around us.  Whether it’s the food we eat, the utilities we use or the financial systems which support our companies, there’s not a part of our daily lives that’s not touched by some form of globally owned business. 

And the benefits of this are clear, particularly for a country with such an outward facing economy as Scotland.  Inward investors constitute just 3% of Scotland’s businesses, yet are responsible for:

• 34% of employment (624,000 jobs)
• 50% of turnover (£119.6 billion)
• 63% of business R&D
• 77% of exports (£24.2 billion)

SOURCE: Scotland’s Inward Investment Plan: Shaping Scotland’s Economy 

However, to fully understand the benefits of inward investment we need to also understand the positive impact it has on indigenous businesses. 

Inward investment provides ‘spillover’ benefits that can be felt across Scotland’s economy, such as supporting wellbeing, providing supply chain opportunities, productivity improvements, spending on research and development and regional impact.

It creates a pathway for alliances to be formed between international businesses and indigenous companies.  For example, when announcing why his company chose to locate in Scotland, Mangata Networks CEO, Brian Holz, said:

“With the skills and available local talent, picking Scotland as our European hub was a natural choice…This is just the beginning of a long partnership and we relish the prospect of the wonderful things we will achieve together.”

Inward investment is not a zero-sum game, where the gains of overseas companies come at the detriment of native businesses.  Rather, it breaks down geographical barriers and provides a catalyst for innovation, the sharing of ideas and mutual growth.  And the biggest winner of all is Scotland’s economy.

There was a timely reminder earlier this week of the importance of attracting international investment to Scotland when the Scottish Government published its Global Capital Investment Plan.

The final pillar of the Scottish Government’s strategy to internationalise Scotland’s economy, the plan contained 30 actions to increase the availability of private capital to businesses and projects flowing into Scotland, while improving links with financial centres.  Similar to the Scottish Government’s Inward Investment Plan published last year, priority will be given to building markets in sectors where our country excels, including low carbon transition, digital, health and life sciences and high value manufacturing.

Scottish Enterprise will play a significant role in delivering the Growth Capital Investment Plan’s ambitions and promoting opportunities to global investors.  With the eyes of the world set to be on Scotland when Glasgow hosts COP26 in November, we are also scoping what global events we can leverage and use as a platform to raise awareness of our net zero ambitions and the opportunities to invest here.

The global impact of COVID-19 on inward investment was significant.  Scotland was not immune to this.  But as the past couple of weeks have shown, there are green shoots of recovery. 

Scotland remains very much open for business and we will continue to highlight to global firms why our country remains such an incredible proposition for companies to locate, invest and grow in.