Team Scotland's inward investment support: evaluation

5. Administrative data linking

Analysis linking management information from delivery partners with an extract^[13] from the Inter-departmental business register (IDBR) achieved a matching rate of 73%. This showed a total of 206 businesses with inward investment projects over the period 2018/19 – 2020/21.

This analysis shows the economic footprint of inward investment companies in Scotland, which have been supported by the Scottish Government through its delivery partners over the evaluation period. It relates to a snapshot of the business stock as of March 2021 and presents the employment, turnover, and labour productivity of this cohort split by various characteristics.

Analysis allowed the figures to be split by project type – new, expansion, safeguarding, multiple – which allows inferences to be made with regards to the turnover and employment that can reasonably be attributed to the support offered. Figures associated with new and safeguarding projects are also likely to increase as business objectives materialise over the period following the support received.

Notably, the majority of projects that are attracted to Scotland are in fact expansion projects. This analysis provides the economic footprint of the business entity at a particular moment in time and will therefore include employment and turnover values that will precede any support which led to the expansion. As a result, analysis on expansion projects is limited as attribution to support cannot be inferred.

• Total employment in Scotland by these businesses is 78,700 and total turnover in Scotland is £20.6 billion. This equates to a turnover per employee (derived labour productivity) of £262,000 which exceeds that of Scottish (£109,000) and rest of the UK (£164,000) headquartered businesses, but not those headquartered abroad (£289,000).
• Average turnover per business was highest in businesses with expansion projects, relative to new and safeguarding projects. The fact that turnover and employment for expansion projects will include the period prior to intervention, is a factor.
• For new inward investment projects that were supported by DPs, total turnover of businesses was £45 million, and employment was 760.
• For safeguarding projects, turnover was £1.7 billion, and employment was 10,690. In addition, labour productivity for safeguarding projects exceeded the average for all registered private sector businesses in Scotland (£152,000).
• Average labour productivity for businesses with new and safeguarding projects was £148,000. This was higher than the Scottish and UK average (£109,000 and £120,000 respectively).
• In terms of labour productivity by IIP opportunity area, the top three areas were in Healthtech (£466,000), Food & Drink Innovation (£272,000), Other (£221,000) and Energy Transition (£157,000). All of which exceed the average labour productivity of Scottish and RUK headquartered companies^[14].
• Companies with projects in the services sector tended to have higher employment, while labour productivity for other sectors, including manufacturing (£317,000), was higher than that of services companies (£231,000).

Broadly speaking, this analysis shows that inward investment businesses with completed projects that were supported by delivery partners, tended to perform better than the Scottish and UK average, but slightly poorer than businesses headquartered abroad^[15].

Data tables for this research are provided and can be found in the supporting documents.