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      Attracting Global Capital in an Era of Unprecedented Competition

      In an era of unprecedented competition for global capital, every nation needs an edge.

      22 Feb 2022 Salah Mussa, Chairman, The Mercantile Group

      Foreign Direct Investment (FDI) reached a total of $870 billion (£620 billion) in the first half of 2021 according to the OECD, with the UK receiving 5 percent of this figure - the third highest level of investment received by any country worldwide behind China and the United States.

      New horizons present challenges, but also opportunities within a network of open and consolidating trading blocs. In an era of Global Britain, to attract this kind of investment from abroad, the UK will have to differentiate itself to avoid losing out. FDI and the relationships we forge with other countries will be crucial going forward, with burgeoning industries like life sciences, advanced engineering, aerospace, and software development set to play a major role in securing it.

      FDI is replete with benefits. Inflows from countries like France, Germany and Canada were crucial to opening up new employment opportunities in the UK at the height of a pandemic that otherwise stifled job creation. And encouraging investment from abroad will be important to fulfilling the government’s Levelling Up agenda, by stimulating growth outside of the traditional regions of prosperity by adding to and creating supply chains, creating new networks, and adding to our spending power, which paves the way for further investment opportunities.

      One of the country’s greatest opportunities for FDI comes in the form of the Oxford-Cambridge Arc. As the UK’s emerging scientific and technological centre of growth, DIT-led FDI projects in the Arc led to the creation of over 26,000 jobs between 2015 and 2020. More broadly, the UK’s market share in Europe for FDI set to break its record of 17.5% in 2020 owing principally to its vibrant knowledge economy.

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      Key to the Arc’s success in attracting global capital has been clustering, or the co-location of the businesses, academic institutions and public bodies that make up an industry within a relatively short distance of one another. This ‘Triple Helix’ of innovation is the product of almost a millennium of measured growth of, and relationship-building across, the institutions which make up the region’s knowledge economy.

      The communities central to the Arc are among the fastest-maturing technological hubs in the country. Milton Keynes is consistently ranked by the Centre for Economics and Business Research as one of the most rapidly growing towns for IT and digital services in the UK, while Luton has carved out a pioneering role in advanced aviation engineering.

      To attract foreign investment, people with experience of international markets – that understand their nuances, priorities and business etiquette – must play a key role. While much has been made of the traditional pull factors for FDI, the importance of prioritising social as well as economic returns needs to be elevated.


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