Creating a Global Profile and Attracting Investment
Over the last few years, foreign direct investment (FDI) has become an increasingly talked about point of focus for the UK government. This has become particularly pertinent as they have framed it as a way to build back better from the effects of Brexit and the Covid-19 pandemic. Whilst the UK has had a 17% decrease in the amount of foreign direct investment from the 2019-2020 period to the 2020-2021 period due to the impact of Covid-19 and Brexit, it was able to retain its spot as third globally for Venture Capital investment into technology, which reached a record 15 billion dollars in 2020 whilst maintaining overall Investor confidence.
In order to fully utilise FDI as a method to build back better, it is important to understand what attracts investment from overseas in the first place. There is also the question of what is FDI when we talk about it, as we are supporting the UK governments agenda on attracting more green and sustainable investment, which was demonstrated at the Government Investment Summit last month and with the UK having just hosted COP26 in Glasgow, but we are also looking to align wider aims to create sustainable innovation eco-systems across the UK, whether that through International SMEs setting up, or capital investment into key infrastructure projects.
Below we outline some findings from a recent panel discussion on FDI which was part of our Innovation Places Summit. The panel examined FDI as a way to catalyse growth into the UK, whilst understanding how places across the country have successfully attracted FDI and grown their reputation for innovation. This session also discussed what more the UK needs to do to attract more international investment. The summit was also used as an opportunity to state CPC’s new development on an FDI strategy based on place-based innovation & investment particularly around our key focus areas of Smart Cities, Mobility & Built Environment.
One of the key points which came out of this session was the fact that we need to be a united ‘Global Britain’ at the heart of any campaigns to attract investment, utilising a ‘One Britain’ narrative, to showcase what the UK as a whole to offer and then adding the regional or city USP to that narrative. This gives legitimacy and strength to the story and offers being promoted. This was a key point raised by Ben Braybyn, from his experience in government and the private sector.
The panel also discussed, how King’s Cross Knowledge Quarter and the West Midlands have leveraged their unique economic building blocks to create places that have successfully courted FDI to drive innovation. They outlined how their wealth of local partnerships (Chambers of Commerce, Local Authorities and Councils etc.) were instrumental in this endeavour, and helped them gain legitimacy, using these partnerships and other regional building blocks such as skills, universities, the wider business and social landscape and youth development to develop innovation eco-systems and attract investment. A key focus was how to make these areas inclusive, and how important it is to build a foundation of trust with the pre-existing communities to bring them along on the journey and also make sure any investment is adding positively to the community and wider eco-system.
Through this in-depth look into how these two regions have successfully built ecosystems that are attractive to foreign direct investment and from Ben’s knowledge and experience, the panel came up with four ways that can help:
- Find local synergies for the companies: Jodie Eastwood outlined that jobs, the right SME’s, research, supply chains and customers are all key to a flourishing eco-system. You need to create a coherent and holistic environment to develop and grow sustainably;
- Show what the local region has to offer on the global stage. Ben Braybyn outlined you need to be able to share your story, but use the ‘Global Britain/ One Britain/UK’ approach to add coherence and value;
- Leverage some of the existing investment to increase and attract more investment (Raquel Orteg-Argiles gave the example that the West Midlands will host the Commonwealth Games in Birmingham as a lynchpin event, which has been and is successful in attracting tourism and investment into the region as a result)
- Keep the message simple, show that you are open and ready to spend and invest together but there has to be a desire to invest from the UK side as well.
In order to consider building an ecosystem that is successful at attracting FDI, especially in the current global competitive landscape, it is also important to consider these three different questions:
- What messages will survive in a congested and contested global environment?
- What relationships will preclude this message?
- What incentives will make people want to talk about you? Should you be looking at freezones and tax incentives; help for international companies setting up; visas etc?
Looking at the regions that have been successful at attracting investment and understanding what is needed to attract it, will be of paramount importance as we set up the UK economy to build back better and the government’s focus on levelling up, gains impetus.
The blog is based on a panel discussion on ‘Creating a Global Profile and Attracting Investment’ at the Connected Places Catapult: Innovation Places Summit. Dr Amy Hochadel was joined on the panel session by Jodie Eastwood the Chief Executive of Knowledge Quarter London, Ben Brabyn the former head of Level 39, and Raquel Ortega-Argilés a professor of regional economic development at Birmingham Business School.