Inward Investment Insight #1

Nov 2022: Sports and FDI Legacy; Scotland; Jobs etc

Nov 04, 2022

Welcome to the first Inward Investment Insight newsletter.

I’ve spent the last 25 years working with companies looking for new locations, and with the places looking to attract them. I’ve worked with towns, counties, regions, states and countries from from Tallinn to Tennessee, and Liverpool to Leipzig. In this time, I’ve seen the good, bad and the ugly of investment promotion and I thought it was time to share some insights.

What follows are my own personal observations and reflections which are entirely separate from any clients I happen to be working with.

The newsletter will not:

- be an instrument of self-promotion (you know what I do, if not see my website)

- big up my existing clients (they don’t need it, they’re already amazing!)

- dance around issues or fear to tell the truth

In each issue, you’ll find:

- #Rants: a comment on a particular issue in investment promotion

- #Teams: focus on a particular location and their FDI work

- #Hacks: bits of best practice or news I’ve spotted

- #Gigs: FDI job opportunities from around the world

Feel free to share with colleagues or unsubscribe - it’s your choice.

#Rant

Legacies from Sports Events

Competing for investment and jobs is a core activity for investment promotion agencies. There is increasing amounts of competitive bidding to be done - not just for inward investors, but for major sporting and cultural events. A similar place marketing effort and a familiar long and shortlisting process is part and parcel of winning the right to host a major event; but one key difference with competitive FDI is the issue of economic legacy and future jobs and investment that can be claimed as being influenced by the event.

One of my very first inward investment roles included planning for legacy aspects in the run up to the Manchester Commonwealth Games in 2002. I’ve since had various inputs to various bids and subsequent work to stimulate economic benefits before, during and after a major event - most recently with the West Midlands for this year’s Commonwealth Games.

FDI Leverage

A decade ago, London delivered what is regarded as one of the best ever Olympics games and one that smashed all records, not just on the track or in the pool, but in terms of economic legacy too. One of the initial headline outputs from London 2012 was £2.5 billion in foreign investment creating 15,000 jobs. To demonstrate the heavy lifting done by inward investment, of the overall £13 billion economic legacy target set by the Government, UK Trade & Investment was responsible for contributing £11 billion over four years.

The more geekish of inward investment stattos may have spotted that this huge number included FDI deals which occurred in London during the year and one outlier figure was that half of these jobs originated from Malaysia. Further investigation revealed the explanation that they were the future jobs anticipated as a result of the sale of Battersea Power Station to a Malaysian investor. Was this deal really as a result of the Olympic Games? It’s difficult to unpick and I’m sure that some VIP hospitality greased the wheels, but given the profile of one of London’s most iconic development sites, I cannot believe that the wheels were that rusty. Anyway, fast forward ten years and last month saw the long-awaited reopening of Battersea Power Station.

Spreading the Cake (Crumbs)

Whatever the accuracy of output statistics, it’s clear that there was undoubted significant net benefits post-2012 to London’s subsequent economic growth. What is far less clear though is how far these benefits spread beyond the capital. I remember inward investment teams in each of England’s Regional Development Agencies spending huge amounts of time and money trying to secure the prize of hosting various Olympic teams as training venues (Birmingham having both the USA and Jamaica base themselves in the city for a while). The reality of economic spin-offs outside of London were less than impressive. In 2013, the House of Lords Olympic and Paralympic Legacy Committee revealed that just seven jobs were created in the North East and 52 in the East Midlands, compared with 14,928 jobs in London.

It’s encouraging to see a more regional focus rather than exclusive big city hosts. This summer saw the Commonwealth Games take place in Birmingham but it was very much a West Midlands spectacle with events in Coventry and Wolverhampton. The 2026 Victoria Commonwealth Games is scheduled to take place across four regional sites in the Australian state of Victoria: Geelong, Bendigo, Ballarat and Gippsland. It will be interesting to see what the wider economic impact is in these places.

The West Midlands did a grand job in putting on the first global multi-sport event post-Covid, so kudos to everyone involved at the various councils, LEPs and Growth Company. Shoe-horning Ozzie Osborne, Duran Duran, Peaky Blinders and Multiculturalism was never going to be easy, but they managed to pull it off. A successful Games, definitely, but what about the economic development legacy?

There is much talk in the lead up to major events about economic spin-offs and projected increases in inward investment and new jobs. One clear benefit has been the leveraging of additional government resources to fund tourism, trade and investment promotion activities. Chief executive of the West Midlands Growth Company, Neil Rami, has outlined the challenges and opportunities around attracting inward investment admitting that “to really unlock the transformative potential of the event for our economy, we need to secure a greater slice of the UK’s FDI”.

Impact Evaluations

In 2016, the What Works Centre for Local Economic Growth (which is jointly run by the London School of Economics, Arup and Centre for Cities; it is funded by the Economic and Social Research Council and UK government)

investigated the issue looking at more than 550 policy evaluations and evidence reviews from the UK and other OECD countries. It found 36 impact evaluations that met the Centre’s minimum standards. The final conclusion was that “The overall measurable effects of projects on a local economy tend not to be large and are more often zero”. Their final report should be mandatory reading for any location that is considering a bid to host future Olympics, Commonwealth Games or World Cup.

Sportswashing

With the football (or soccer) World Cup about to kick off in Qatar, global attention will be focused on the Gulf state that’s the size of Yorkshire (or Connecticut) with a population smaller than Greater Manchester (or Kansas). Qatar’s moonshot is being milked by their investment promotion agency Invest Qatar which is worth a look, if only to see what unlimited funding can do for your marketing! I’ve worked with many locations to help set-up ambassador programmes, so the fact that David Beckham is being paid a reported £10 million by Qatar to be an ambassador for the World Cup is eye-watering!

As with Saudi Arabia’s attempts to project soft power and rebrand itself as a sports-friendly sponsor of football, golf, boxing and cricket, the legacy for Qatar is political and strategic rather than economic. Such oil-rich nations play by different rules and they certainly won’t be overly worried about any post-event cost-benefit analysis. Time will tell whether inward investors will be taken in by the current wave of sportswashing. Qatar is 160th in the latest freedom rankings by Freedom House, Saudi Arabia is 199th out of 210 countries. Hopefully sportswashing will shine a light on the reality beyond the IPA glossy brochures.

#Teams

SDI, Scotland

Throughout most of the last three decades, the Celts have been to inward investment what Brazil is to football. The levels of funding and strategic priority given to investment attraction in Ireland, Scotland and Wales has put them close to the top of any performance league table given their relative sizes. While the Welsh have struggled to regain their profile since the Welsh Development Agency was abolished (is it really 16 years ago?), Scottish Development International has successfully adapted and reinvented itself with an offer that is relevant and well articulated.

New Strategy Progress

Scotland published a new approach to attracting inward investment in 2020, which was refreshingly bold and transparent (not words usually associated with inward investment strategies). Two years on, the Scottish Government has published a Progress Report which makes interesting reading. The original plan heralded a more selective strategy and called for the pursuit of a “Values-Led Proposition” for Scotland that sought “inward investment aligned with our values as a nation, committed to fair work, net zero and inclusive prosperity.”

Recent results are strong with FDI projects up by 14% in 2021 and the highest share of UK projects in the past decade according to EY.

Scottish Development International has more than 30 offices around the world and this appears to be paying off. There really is no substitute to having great people located in-market at the coalface of inward investment. Brass nameplates have limited real value, but employing reps that really understand trade and investment definitely does.

There has also been a major splurge on creating digital assets to support the new propositions as part of the Brand Scotland Trade & Investment Toolkit. Scotland has made available more than 100 assets from sector brochures to videos with German, French and Mandarin subtitles. Loving the transparency and delivery, (but not necessarily all of the messaging, quite a bit is bland anywheresville).

Political Football

Inward investment into Scotland has always been used as a political football by both sides in the debate over Scottish independence. It is fair to say that the smoke and mirrors of FDI statistics can often be fertile ground for confirmation bias to take hold. During the last referendum debate both sides claimed that inward investment into Scotland would be boosted or strangled depending on the result. Similarly, recent FDI successes are claimed by nationalists as evidence that Scotland can stand on its own, and by unionists that the status quo is the driving force behind new jobs and projects.

In October 2022, the UK government evidenced the scale of investment promotion support of Scotland overseas in a submission to the Scottish Affairs Committee.

The same committee was provided with a really clear outline of the activities and success of Scottish Development International who conclude that their relationship with the UK’s Department for International Trade is a win-win for the companies that it helps.

It’s well worth a deeper dive into the SDI website to see what a clear and compelling proposition looks like, delivered in a professional way. Scottish Development International deserves praise for having such a bold and transparent approach to inward investment - something most places can learn from.

#Hacks

Invest Victoria delivers pitch perfect annual report

Every agency should use their annual results as a promotional opportunity to highlight specific projects; demonstrate real value; and strengthen their proposition - although too few manage to do this. The latest Invest Victoria annual report hits the mark perfectly and draws attention to some innovative incentives such as their Venture Growth Fund; R&D Cash Flow Loans; and Equity Investment Attraction Fund.

Singapore EDB’s ‘twin to win’ strategy

SG+ is the Singapore EDB’s strategy to collaborate with neighbouring Malaysia and Indonesia to promote a combined offer with a HQ in Singapore and a manufacturing operation in one of their low cost neighbours. Smart strategy, nicely delivered. Reads more like a consultant’s report than an investment promotion pitch.

US Govt to create Economic Development Corps

As part of its recovery plans, the US Economic Development Agency is funding the recruitment and training of 65 (early to mid-career) economic developers to be placed in underserved communities across the US.

The ultimate guide to investment aftercare

It’s been a few months since this book was published, but Investment Aftercare Explained by Carolina Peters (ex-London & Partners) and others, is quite simply the most comprehensive practitioner’s guide to what is variously called Business Retention & Expansion or Investor Development or Aftercare.

Who’s divested from Russia and who hasn’t yet

This month, Ford and Mercedes have finally pulled out of Russia, but according to researchers at Yale, many hundreds of inward investors are digging in and remaining in the country - such as TGI Friday’s; Etihad Airways; Mitsubishi; Fresenius; B.Braun; and Benetton. The Yale list of foreign investors is constantly updated and provides a fascinating insight to the battle between shameless business and human decency.

The most resilient IPA in the world

And finally, I want to acknowledge the truly inspirational team at UkraineInvest who in the face of unimaginable challenges have never stopped working. Regular news, attending international events, putting out sector research and championing the rebuilding opportunities in Ukraine, they are the epitome of resilience and deserve every accolade and recognition possible. Equally, shame on those countries that turn a blind eye and continue to court Russian government investment agencies and companies - their complicity should not be ignored either.

#Gigs

Here’s a selection of the current opportunities around the world for inward investment professionals. We’re not responsible for any of the links or any that may have now closed.

UNITED KINGDOM

- Head of High Potential Opportunities Programme, DIT, Darlington

https://www.linkedin.com/jobs/view/3329489424

- Deputy Director, Northern Powerhouse, DIT, Darlington

https://www.linkedin.com/jobs/view/3312329243

- Head of Business Development, Manchester

https://www.linkedin.com/jobs/view/3300345123

- Business Development Exec - Creative, Digital and Tech, MIDAS, Manchester

https://www.linkedin.com/jobs/view/3336107377

- Head of Commercial, West Mids Growth Company, Birmingham

https://www.linkedin.com/jobs/view/3331277292

- Marketing Manager (Maternity Cover), West Mids Growth Company, Birmingham