This week saw two very different, but excellent, results for Team Scotland.
Yesterday’s announcement of the latest EY Foreign Direct Investment data shows Scotland strengthening its position as the leading FDI destination in the UK outside of London, with three Scottish cities in the UK’s top six. And, of course, on Saturday a significant victory for the men’s national football team.
Seemingly unrelated results but with many similarities, and lessons.
Like sport, attracting Foreign Direct Investment is competitive. International businesses have options on where to establish manufacturing plants and hire local people – and to be clear, what we are talking about here is the establishment of new industrial or business capacity, not the buying up of existing assets or real estate. Contrary to popular misconception, attracting FDI isn’t about throwing money at multinationals. If that is all the investor is interested in then they’re not the right investor for Scotland’s economy. Government support for FDI projects is typically around £20 million in any year, a small percentage of Scotland’s total £400m+ economic development budget and a subsidy without access to skills, customers, technology partners or a supply chain doesn’t attract investors.
And FDI is about much more than investment, it gives the local economy access to international talent, technology and markets. It is a necessary, but of course not sufficient, part of building world-leading industrial clusters – growing local businesses to scale is also essential, but that’s easier with FDI than without it. Every local business welcomes a global customer setting up on their doorstep. Yes, there can be competition for skills in the short term, but building a globally-recognised cluster attracts talent to come and live and work in Scotland, and keeps employees in Scotland who might otherwise have looked elsewhere, increasing the total skills pool.
So what has delivered this strong FDI performance, and how do we replicate it elsewhere in Scotland’s economy and wider policy landscape?
First, the importance of having an evidence-led plan, and sticking to it. Scotland’s FDI Plan "Shaping Scotland’s Economy" is clear about where we should focus – on a small number of key sectors where Scotland has genuine global advantages and can be world leaders. It is also clear on who our target investors are – those who are here for the long haul, have high standards on pay, conditions and the environment, and who value being part of Scotland’s world-class innovation and technology eco-systems.
All too often government lurches from one headline-grabbing initiative to another, jumping on bandwagons like they are going out of fashion. But good things come to those who persevere. Be flexible when needed but stick to the plan and focus relentlessly on delivery.
Secondly, get everyone on board. One of the real strengths of Scotland’s approach has been that everyone in Team Scotland has bought into the plan. Whether that be our excellent Scottish Development International teams based in key markets globally - raising Scotland’s profile and making first contact with investors - through to our skills providers, universities and innovation centres, local investors – including the Scottish National Investment Bank - or government in all its spheres. Everyone the foreign investor meets is telling the same consistent story about where Scotland is going and why the investor needs to be part of that journey. FOMO - fear of missing out – is a powerful driver for business decisions.
Read more: To be truly successful Scotland needs an industrial strategy
Work hard at delivery. Swanning in and out for photocalls when announcements are made isn’t what delivers results. Putting in the hard yards when the cameras aren’t turned on is what impresses investors. It shows that everyone is committed to their success as part of Scotland’s success.
Unfortunately, this approach isn’t something replicated across all of government’s work – in economic development and elsewhere. Chopping and changing direction, lack of consistent messaging and team members all pulling in different directions is something that everyone recognises. But doing the right thing isn’t hard. It just requires a bit of planning, and a commitment – from the top of government – to sticking with the programme.
Getting the basics right up front means not having to constantly make excuses for poor performance later.
And finally, don’t undersell Scotland. Be ambitious and confident about what we can do. Have the mindset to be the team that snatches victory from the jaws of defeat, not the other way round.
Mangata choosing Ayrshire over Florida for its global HQ and 500-employee satellite manufacturing plant, or Sumitomo deciding to manufacturing offshore energy cables in the Highlands, rather than ship product in from elsewhere, demonstrates Scotland’s ability to beat allcomers in building our economy.
Like in football, winning becomes a habit.
Where we have successes recognise them, play to our strengths, understand what works and do more of it.
None of this is rocket science – unless of course you work in Scotland’s world-leading space sector.
Ivan McKee is an MSP and former Minister for Business, Trade, Tourism and Enterprise
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