Targeted approach to attracting inward investment delivering results
Mark Hallan, Director of Global Investment, SDI at Scottish Enterprise takes a closer look at the EY Attractiveness Survey 2021 and explains why Foreign Direct Investment remains vital to Scotland's economic recovery
It’s been a wonderful past few days for inward investment in Scotland.
On Monday, EY Scotland published its Attractiveness Survey 2021. The annual survey confirmed that Scotland was, yet again, the most attractive location for inward investment in the UK outside of London.
In addition, EY’s figures revealed that Scotland was bucking UK and European trends of declining Foreign Direct Investment (FDI) in 2020 by increasing the number of inward investment projects it secured (up 6% compared to 2019). Given the challenges encountered due to COVID-19 last year, that’s a truly astonishing achievement.
And the good news continued yesterday with the announcement that innovative Australian fintech, BlackArrow Financial Solutions, had located its global headquarters in Glasgow.
The company, which utilises artificial intelligence technology to support its customers in their journey to financial freedom, chose Scotland as the centre of its operations following support from Scottish Enterprise and SDI colleagues based in Australia. Approximately 45 new software developer and technical support jobs will be created as a result.
BlackArrow’s decision was the latest vote of confidence in our country’s exciting fintech sector and underlined the message that we are sharing with the world: Scotland is very much open for business.
As we emerge from the COVID-19 pandemic and global economies return to something akin to normality, how we tell that story and who we share it with will become increasingly important.
Inward investment is a fiercely competitive marketplace. More nations and regions are committing ever increasing resources to secure a decreasing number of investment projects. COVID’s impact on FDI has seen investment opportunities diminish further, with investors cautious in committing capital to new overseas assets.
This means we need to be savvier about our approach to attracting inward investment. We need to focus more on sectors where Scotland has a genuine competitive advantage and less on areas where we are not as strong as others.
And that’s exactly what we are doing.
Last year SDI was delighted to contribute to the Scottish Government’s new inward investment strategy, Shaping Scotland's Economy: Scotland's Inward Investment Plan, which takes a targeted approach to attracting FDI.
This evidence-based strategy concentrates on nine areas of opportunity where Scotland is a genuine world leader, primarily due to our natural resources, access to research and innovation and critically, our incredible, skilled workforce.
Importantly, these sectors have proven to be the most resilient to COVID-19. They are also expected to deliver growth over the coming years.
SDI has more than 30 offices across the world and our field colleagues have been aligning their activities to reflect this strategy, relentlessly promoting investment opportunities and highlighting the very best Scotland has to offer.
And the early signs are that this more forensic approach to attracting inward investment to Scotland is paying off.
EY’s 2021 Attractiveness Survey revealed that Scotland was:
- Number 1 nation/ region in the UK for attracting utilities FDI projects (increasingly renewables and cleantech)
- Number 1 nation/ region in the UK for attracting agri-food FDI projects
- Number 2 nation/ region in the UK for attracting Financial Services and Business Services FDI projects (behind London)
- Number 2 nation/ region in the UK for attracting life sciences FDI projects
Each of these sectors are areas of opportunity identified within Shaping Scotland’s Economy.
But it’s not only sectors where we’ve been taking a more targeted approach to attracting inward investment. We’re focusing on our values, too.
If it was not clear before COVID-19, the pandemic and its impact has underscored Scotland’s values that centre around a fair, sustainable and inclusive low carbon future. These values are at the heart of our ‘sales pitch’ to potential and current inward investors.
We know a growing number of companies position values at the centre of their mission goals, focusing on what they can contribute to society as well as generating profits. By highlighting how Scotland is well-placed to support global businesses achieve these aspirations via the tech-driven, net zero, wellbeing economy we are building, enduring partnerships that deliver economic opportunities for our communities can be created.
Scotland benefits hugely from inward investment. Inward investors constitute just 3% of Scotland’s businesses, yet are responsible for 34% of our employment and 50% of our turnover. FDI also provides wider benefits such as supply chain opportunities and increased R&D spending that impacts across Scotland’s economy.
That’s why continuing to encourage overseas investment has such a critical role in Scottish Enterprise achieving its ambitions to accelerate Scotland’s economic recovery over the coming year, plans that have creating good, green jobs at their core.
So, today we celebrate Scotland’s ongoing ability to attract inward investment, without being complacent about the COVID-caused challenges we still must face. Nevertheless, Scottish Enterprise remains confident that a targeted approach to attracting inward investment, which focuses on our strengths and proudly advocates our values, will reap further rewards over the coming months ahead.