We may have problems a-plenty with a slowing economy and a faltering rate of employment growth. But there is good news to report:  Scotland has enjoyed another record-breaking year for foreign direct investment (FDI).

The latest annual survey by accountants Ernst &Young (now branded EY) shows that Scotland has retained its position as the top location in the UK outside London for foreign direct investment (FDI).

There were a record number of investment projects won by Scotland, with our share of total UK FDI up by 51 per cent and job creation up 52 per cent in 2015.  The picture shows First Minister Nicola Sturgeon accompanied by Scottish Enterprise chief executive Lena Wilson meeting staff at  Prestwick-based UTC Aerospace Systems in July last year.

2015 was also a record year for Scotland in attracting R&D inward investment. With 23 individual projects, up from 17 in 2014, Scotland is now the top UK region for R&D projects.

Notably, Scotland’s share of FDI projects within the UK is also on the increase. Last year Scotland won 11.2 per cent of all FDI projects into the UK, up from 5.9 per cent in 2005. In terms of projects secured, Scotland has three cities represented in the UK top 10, with Edinburgh, Glasgow and Aberdeen featuring in third, sixth and tenth place respectively.

Now foreign direct investment in recent years has come to be seen as a mixed blessing for Scotland. After the initial boom in giant US electronics companies in the middle and late 1990s, many companies retrenched and closed down plants in the 2001 recession. FDI came to be seen as a wayward supporter of the domestic economy and cast a cloud over our overseas campaigns to attract companies here.

And the figures released today concentrate heavily on numbers of FDI projects rather than on size and employment generating capacity.

Questions also arose on the extent to which FDI had beneficial effects on domestic suppliers of services and components. It was not quite the spur to domestic business investment as had been hoped.

Many argued that resources within Scottish Enterprise, the country’s main business promotion agency, should be concentrated more heavily in developing indigenous business investment and growth, considered to be more sustainable and less vulnerable to pullback by remote head office bosses.

Nevertheless, the continuing ability to draw in FDI in the face of global economic slowdown is heartening and helps to calm concerns that Scotland may have lost its attractiveness as a global investment destination.

FDI remains an intensely competitive arena with countries actively vying for projects. FDI “wins” are still seen as a validation of domestic economic policy and performance and are worn as a badge of pride.

The figures, released today, will give the Scottish government some good news to boast, and will be a particularly strong morale-booster for Scottish Development International.

In terms of geographical source of FDI projects, the United States remains by far and away the biggest source. The top five countries investing in Scotland in 2015 were the US (43 projects / 36%), France (14 projects / 12%), Germany (8 projects / 7%), Norway (6 projects / 5%) and Canada (5 projects / 4%).

Commenting on the survey, Paul Lewis, Managing Director of Scottish Development International, said: “This is a tremendous achievement for Scotland in what continues to be a challenging and highly competitive inward investment market. This record year reflects the excellent work of all of our staff around the world and of our partners and networks which work with us in promoting Scotland as a highly competitive international business location.

“In particular, the R&D results illustrate increasing investor confidence in Scotland as a world leader in science and technology delivering high value investment which will help to drive Scotland’s sustainable economic growth.

“It’s great to see that in addition to retaining the number one position in the UK outside London, Scotland also appears to be widening the gap, with our market share of FDI almost doubling in the last decade. We are fully focused on maintaining this position and are committed to expanding our global reach.

Few would disagree with that. But in the teeth of apprehensive business confidence at home, the wider agency has its work cut out in encouraging more investment and expansion by domestic firms.



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