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The UK can boost support for inward investment by looking outwards

By Shaun Delaney, PA economic development expert

The UK’s Investment Promotion Agency (IPA), the Department for International Trade, is a world leader in attracting foreign direct investment (FDI). Previously known as UK Trade & Investment, they won a United Nations Investment Promotion Award in 2014 for ‘Promoting FDI in Sustainable Development’. And more recently, the World Association of Investment Promotion Agencies (WAIPA) members voted UKTI as the most sophisticated and advanced IPA. As the UK prepares to leave the European Union in 2019, its inward investment strategy must adapt to the changing environment. The government’s industrial strategy provides a framework for directing promotion efforts. And it makes sense to see where other countries have been successful in those areas.

Investment promotion is an industry in itself

Market leaders and fast-growing nations battle for FDI and international recognition. IPAs come in many shapes and sizes. Some may be private, some public, and many sit somewhere in between as publicly funded, but partly-outsourced, organisations. IPAs can also be nationally-focused, with others representing regions, towns or cities.

IPAs’ efforts are monitored and benchmarked by several multi-national organisations including the United Nations – through the United Nations Conference on Trade and Development, the Financial Times and WAIPA. And they’ve all carried out studies where they rate IPAs based on performance and relative impact on their respective economies. So these studies and awards are a rich source of ideas.

Learning from the best

The UK can learn from international and regional IPAs by examining how they carry out their core activities and identifying best practice. They might look at project handling and account management, the website and marketing materials for example.

And we think the UK can also learn by looking at the international IPAs that are recognised for best practice in the areas identified in the pillars of the government’s industrial strategy. We’ve identified seven examples the Department for International Trade could emulate to support those pillars.

UKTI

UK Trade and Investment: Driving economic growth and securing over 150,000 jobs

Find out more

Success stories from around the world

Investing in science, research and innovation: Acció (Catalonia Trade & Investment)

In 2016, the City Council of Barcelona was named as IPA of the Year in the fDiIntelligence Strategy Awards. The city has combined the clever use of technology and urban planning strategies with its investment promotion efforts, leading to an increase of FDI into Catalonia and Barcelona, when overall investment into Europe has been in decline. Catalonia Trade & Investment has been instrumental in moving Barcelona from an industrial economy to a knowledge-intensive economy, with clusters in pharmaceuticals and technology. It achieved that by providing specialised services aimed at companies looking to carry out R&D, including introduction services to potential R&D partners and financial support.

Upgrading infrastructure: Invest in Lyon

Over the past five years, €300 million has been invested into Lyon’s infrastructure to turn it into a world-class smart city. Lyon is undergoing a period of strong growth, with a 50% increase in FDI between 2014 and 2015, and the city’s major urban projects include components such as positive-energy buildings, car-sharing programmes, urban modelling and energy management programmes. And Lyon will soon be home to Part-Dieu – set to be France’s second largest business district after La Défense in Paris. When completed, the office space will total 140,000 square metres and the city’s Carré de Soie is predicted to transform into an urban hub of leisure, business and residential facilities.

Developing skills: Invest Northern Ireland

The Assured Skills programme is a joint programme between the Department for the Economy Northern Ireland and Invest Northern Ireland. When a company is interested in creating jobs in Northern Ireland, Assured Skills provides the necessary support to create a skilled workforce through bespoke training programmes. This typically involves an eight to 10 week pre-employment training programme delivered by a local college or university, followed by a four to six week placement with a participating company.

Supporting businesses to start and grow: Invest Hong Kong

Launched in 2013, StartmeupHK is an initiative by InvestHK to promote the Hong Kong start-up ecosystem and connect entrepreneurs in local and overseas start-up communities. At its core are the missions to promote Hong Kong as a start-up destination, bring global entrepreneurs to the city and attract innovative, scalable and high-impact ventures. Today, the initiative has grown to include the StartmeupHK Festival that offers events to promote start-ups throughout the week, and connects high-growth companies with potential investors.

Developing affordable energy and clean growth: Singapore Economic Development Board

In 2015, the Singapore Economic Development Board won the UNCTAD Investment Promotion Award for web-based promotion of green FDI. It was honoured for its website's detailed coverage of a variety of green industries, as well as for highlighting investment opportunities in environment and energy.

Cultivating world-leading sectors: Invest in Israel

With the highest concentration of start-ups in the world after Silicon Valley, Israel has become known as the ‘start-up nation’. More than 270 international investors have established over 320 advanced R&D facilities throughout Israel, including Google, Apple, Facebook and Microsoft. These multinationals employ around half of Israel’s hi-tech workforce and contribute significantly to the Israeli economy. More recently, a beta site in a part of the city is enabling start-ups to experiment with new smart city technologies.

Driving growth across whole country: CINDE (Costa Rica Investment Promotion Agency)

CINDE has won various awards for its investment promotion activities, bringing manufacturing, services and life sciences projects into Costa Rica. In 2016, CINDE was named best high-tech IPA in Latin America by the World Economic Forum. CINDE is also internationally renowned for its efforts in promoting FDI throughout the country. Special incentives, including 0% corporate tax, are offered to companies setting up outside the metropolitan zone, and CINDE is active in ensuring companies make the right contacts and get the skills they need in these areas.

The UK could replicate these ideas

To help fulfil its industrial strategy, the UK could replicate these types of initiatives at a nationwide or regional level. We’ve worked with a host of IPAs, advising them on best practice delivery of FDI and creating a methodology (COMPETE) to help them align their national assets with the demands of foreign direct investors. Our work with the World Bank, where we benchmarked IPAs on their activities and results, also gave us useful insight into what makes a great IPA. Whilst the UK is a world leader in the attraction of inward investment, there is still much we can learn from other countries to keep this position, and fuel the growth of our economy.

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