Shaping Scotland's Economy - Inward Investment Plan: progress report 2022

Section 1: Ministerial Foreword

Attracting businesses to invest in Scotland is a key driver of our long-term economic wellbeing and prosperity. Inward investment^[1] makes a disproportionately positive contribution to Scotland’s economy. Although only three per cent of businesses in Scotland are inward investors, these businesses account for over a third of jobs, around half of GVA, just under two thirds of Business Expenditure on Research and Development (BERD) and three quarters of international exports.^[2] These businesses play a key role in Scotland’s economy, giving us access to global technology, talent, markets and investment. They support the building in Scotland of globally recognised and leading clusters and the development of local businesses and supply chains.

In October 2020, we published Shaping Scotland’s Economy: Inward Investment Plan.^[3] The Plan outlines our ambitions for Scotland to be a leading destination for inward investment aligned with our values as a nation, committed to fair work, net zero and inclusive prosperity. The Plan highlights the important role inward investment plays in creating high-value jobs for the economy, takes an evidence-led approach to identifying Scotland’s strengths, aligning these with current and projected global investment flows, and sets out a series of actions to attract further inward investment to Scotland.

A strategy without delivery adds no value. That’s why we have published this update to report progress on the actions we have taken to deliver our Plan, and the results we are seeing as a consequence.

Despite global headwinds, and the impacts of Brexit and Covid, over the last 18 months we have been rigorous in our delivery of these actions. At the 2022 World Forum for FDI,^[4] in Edinburgh in May, I announced the annual inward investment results of Scotland’s Enterprise Agencies: Scottish Enterprise (SE), Highlands and Islands Enterprise (HIE) and South of Scotland Enterprise (SoSE). The Enterprise Agencies helped to attract 113 inward investment projects for 2021-22, with 39 new investors choosing to locate in Scotland. 7,780 direct jobs were created or safeguarded through inward investment, demonstrating that inward investment is driving economic growth, as well as creating and protecting jobs across Scotland.^[5]

A few weeks later, EY’s Annual Attractiveness Survey 2022 showed that Scotland is leading the UK in attracting inward investment. Scotland has maintained its position as the top performing FDI region or nation of the UK, outside of London,^[6] and is outperforming the rest of the UK and Europe with the growth in the number of FDI projects attracted. Scotland’s FDI projects were up by 14 per cent from 2020, compared to a 5.4 per cent increase in Europe and a 1.8 per cent increase in UK.

These are fantastic results for Scotland and demonstrate that our Plan is working. They also underline the importance of inward investment in supporting the ambitions set out in our National Strategy for Economic Transformation (NSET),^[7] by attracting high quality inward investment and technologies required in emerging areas such as energy transition, decarbonisation of transport and space.

In my extensive engagement with inward investors, both in Scotland and overseas, it is clear that our values-led approach and clarity of focus on key sectoral strengths is increasingly resonating with existing and potential investors. However, we cannot rest on our laurels and we must continue to collectively engage with investors to put Scotland’s case forward for attracting inward investment in an increasingly competitive international environment.

This Inward Investment Plan: Progress Report 2022 sets out what has been delivered by Team Scotland since the Plan’s publication. It also sets out our priorities for the next phase of Plan delivery to drive forward our ambitions of attracting further values-led investment to Scotland. I take this opportunity to thank all in Team Scotland who have worked hard to deliver this success.

Ivan McKee MSP Minister for Business, Trade, Tourism and Enterprise