This article was first published by the Western Mail.
The Welsh Government has recently defended its FDI (Foreign Direct Investment) performance after EY released figures suggesting that it has halved in the period 2015-2016.
While the government argues that the numbers do not give the complete picture, they do come after recent ONS figures showing that Wales’ share of GDP grew by 0.3% in the first quarter of 2017, down from 0.7% in the fourth quarter of last year.
The accuracy of the statistics should be a matter for a different debate, what is important is that the numbers tell an all too familiar story for Wales: that it is a nation failing to reach its full potential in a challenging environment.
The global economy is in its most precarious position in decades. There is increased competition for FDI between old established and newer, perhaps more needy, nations and political uncertainty in the US and Middle East, as well as the particular challenges of Brexit.
This is underpinned by increasing disparity between the haves and the have nots at home and abroad; and the rise of the digital economy that is fuelling social media use and access to data that informs the public but inadvertently can conspire to undermine investor confidence.
Wales faces the additional challenge of being a net beneficiary of EU funding. Industry bodies across sectors from agriculture to steel, aerospace to automotive, renewable energy to life sciences are consumed by debates about what promises they can secure from Government to underwrite potential funding gaps.
This challenge can be addressed but the Welsh Government needs to make the right moves now.
Investors like certainty, they like consistency and they like to know a country’s leaders have a vision for the future and clear path to get there.
Now is the time for the Welsh Government to step forward to show potential investors it has that vision and that Wales is open for business. This should start with simple short term steps such as more effective communication and strategic marketing of key sectors. That can be followed by medium term activities including education reform to deliver the workforce of the future and finally long term investment in infrastructure.
All these will then present Wales in a strong a positive light on the international scene.
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The government then needs to overcome its distaste for picking winners when this might be at the expense of near contenders and even also-rans. There are simply not enough resources in the economy to shore up the lower end of the value chain.
Whether selecting and focussing on the future stars of the Welsh economy or targeting high growth markets to entice investment, it makes sense to deploy resources strategically and where they have the best chance of success.
For example, targeting firms in the compound semiconductor industry and building on the cluster in Cardiff will help Wales build a modern flagship industry, add to the 5,000 jobs it will create and boost the supply chain in the country.
Delivering ecosystem accelerators in the Cyber cluster, life sciences and renewables sectors will draw more innovation from academia into industry than simply entertaining the aspirational ambitions of mega projects such as the Circuit of Wales.
The two City Region deals offer the opportunity to galvanise commitment to investment in infrastructure (SW Metro) and growth (Llanelli Wellbeing village).
In addition the Welsh Government has plans to support programmes such as the Swansea Tidal Lagoon, the Skills Gateway and the supply ecosystem development around Wylfa B. These plans can allay investor fears around infrastructure and skills respectively but they have to demonstrate progress and soon.
This kind of long term investment and forward thinking breathe confidence into a fragile global economy.
Things will look up for Wales if it can show the determination, drive and commitment to target resources to move it into the fast lane and attract the FDI and growth that will fulfil the nation’s potential.
Pierce McDaid is an economic development expert at PA Consulting Group.