SDI in £325m boost for Scottish economy

Scottish Development International (SDI) contributes £325 million annually to the Scottish economy through its inward investment and internationalisation activities, according to an independent evaluation report, published today (27 May).

The report was carried out by SQW Consulting to assess the effectiveness of the support offered by SDI and make suggestions for future SDI strategy.

Findings from the evaluation suggest that for every £1 spent by SDI on attracting inward investment to Scotland, a further £11 is generated for the Scottish economy, while internationalisation activity generates an additional £7 for every £1 invested by SDI.

The evaluation used a variety of different research techniques in producing the findings, and all techniques drew the same conclusion; that SDI has a significant impact on the companies it supports and on the wider Scottish economy.

This is the first time this type of evaluation has been carried out by SDI, and this depth of evaluation has rarely been undertaken within the UK or overseas within the public sector

Other key findings from the evaluation include:

• SDI has created around 19,000 jobs to date, demonstrating its importance in supporting employment
• SDI assistance has led to an additional £58 million average exports per annum
• An estimated £72 million GVA is likely to be added to the Scottish economy through internationalisation alone over the next three years, due to SDI activity in this area
• Almost 50% of all businesses interviewed reported that because of the support received from SDI, they had met customers/partners that they would have otherwise not have been able to meet
• 89% of businesses that SDI has helped internationalise considered their engagement with SDI to have been worthwhile
• For 74% of the business interviewed, SDI support has impacted or is expected to impact on their export sales
• 41% have achieved sales in new overseas markets and 80% expect to achieve overseas sales as a result of the supported internationalisation activities
• Analysis shows that there are higher wages, higher employment and higher labour productivity in SDI-assisted inward investor companies
• 73% of inward investors working with SDI consider SDI to have been very or fairly important in ensuring the continuing presence of the business in Scotland.
• SDI assistance has had a strong and significant impact on company performance, with businesses assisted to internationalise nearly 19% more productive than ‘matched’ cases with no assistance
• Most SDI-assisted inward investment companies are employing more people than planned, doing more R&D and have broadened their product range

David Smith, interim chief executive of Scottish Development International, said:

"These findings confirm the huge value of SDI support to the Scottish economy, and it is particularly encouraging to hear this message coming through clearly from both the econometric data and also the company survey results.

“The findings have also provided us with some interesting food for thought regarding how we can refine our services to ensure we offer the right kind of support to help Scottish companies become more globally competitive and really transform Scotland’s economy.

“It’s also heartening to see that the recommendations validate the approach we are already taking to increase the availability of internationalisation support to Scottish businesses.

“For example, we’re investing in initiatives such as the Smart Exporter, alongside other public sector partners, to increase the number of businesses exporting by equipping them with the skills and knowledge required to target new international markets.

“We’re also putting additional resources into services like the International Preparedness Programme, to ensure that companies are adequately prepared when it comes to making their first global connections, and redirecting resources towards the faster-developing economies and market sectors of greatest opportunity for Scottish businesses.”

Lena Wilson, chief executive, Scottish Enterprise said: "Internationalisation is the single biggest opportunity for Scottish companies and I want the businesses we work with to be inspired to raise their sights and ambitions to consider the global environment.

“As such, we are fully committed to protecting our investment in SDI and in fact, a significantly larger proportion of our budget over the next three years will be used to support globally competitive companies in pursuing new opportunities overseas.”

Enterprise Minister Jim Mather added: “Today’s report confirms the value of SDI’s work in helping Scotland achieve its full economic potential. It is also important confirmation of the inherent strength and resilience in our economy – both in terms of attracting investors and Scottish companies expanding abroad. By showcasing Scotland and positioning our economy within a growing and increasingly diverse global marketplace, SDI is creating new opportunities from growing markets and the industries of the future.

“Supporting exporters is a key part of our economic recovery plan and the challenge for us all is to capitalise on these opportunities and ensure we are in the strongest possible position to build on Scotland’s recent return to economic growth."

To find out more about how Scottish Enterprise is having an impact on Scottish companies, please read about our new business plan and the latest SMAS results.