A trip to New York and Boston by 21 Glasgow companies reaped immediate orders of £207,000 as the Scottish Council for Development and Industry (SCDI) began a programme to help firms break out of the sluggish UK market.The visit is one of four trade trips to be run by the business networ for city firms over the coming year.

Glasgow City Council put up £60,000 for the programme, which replaces its own set of visits, giving £550 funding for each company on the trips.

Jane Gotts (right) international trade manager for  SCDI said: “We are really trying to promote more international opportunities with the lack of growth in the UK market. We are saying to businesses whatever you are selling here, it is much easier to do business overseas than you think.

“Scotland," she addes "has a very good reputation in North America, It is about how to capitalise on that. It is easier to get to market now. There are flights daily out of Glasgow to New York." [Pax Eyjafjallajökull!]

The companies on the visit were ranged from High Voltage  Instruments looking to sell power line testing kits to American energy companies, to the restaurant booking service,  Restaurant.diary.com which in January tied up with Livebookings.co.uk and was now set to meet with the Boston Restaurant Association to discuss selling their software.

Of the companies who took part 86% said they had made “successful contacts”. Around 13 of the 21 intend to return within the next year. Six opt for “within six months”. SCDI will run business trips to Poland, the United Arab Emirates and Toronto, Canada in the coming 10 months.

Scottish SME and the export route
Only a third (34%) of small and medium-sized enterprises (SMEs) in
Scotland currently export. Over half of those actively exporting (59%) now say foreign trade is central to their growth strategies.

Eight in ten (82%) say they have been spurred on by strong overseas demand, and 23% report that external advice has helped them to target foreign trade.

Worries
About potential bed debts – 20%
Language barriers – 20%
Fears about possible late payments – 19%
Foreign currency fluctuations – 19%
Lack of resources to explore new markets – 17%
Perceived lack of expertise – 11%

Of those companies that were exporting from Scotland, almost a quarter hoped to build business in China and the Far East, and almost a fifth saw opportunities in Africa and the Middle East, while Europe and North America remained the dominant markets.

Meanwhile, another survey of Scotland's international activities showed it had continued to outperform most other parts of the UK in attracting foreign investment. It continued to have the third highest number of companies choosing to locate business in Britain, after London and south east England.

London remained hugely dominant, with more than two-thirds of all inward investment decisions. It had 263 inward investment projects included in the survey, whereas Edinburgh and Glasgow each had seven, and all of Scotland had 51.

The Ernst & Young survey showed how far inward investment has fallen as a source of new jobs. Ten years ago, more than 60,000 jobs were created in Britain through foreign direct investment. Last year was the second consecutive year with only 20,000 jobs being created that way through new projects or expansions.

The UK continued to dominate inward investment within Europe, having 30% of business service projects, 36% of software projects and 27% of financial sector projects within western Europe.

That is attributed to dominance of projects coming from US companies. America also represents more than two-thirds of projects coming to the UK, followed by France and Germany. India has the fourth largest number of investments in Britain, with 38 projects.

Scottish Enterprise: inward investment & exports
Scottish Enterprise, the main development agency north of the border, has been trying to measure its own contribution writes The Economist. It asked SQW Consulting to use a novel technique to test its performance in two areas: securing inward investment by foreign firms, and helping Scottish companies export more.

For each activity, the economics consultancy compared the performance of two matching sets of firms: those that were assisted by the agency, and another group that were not. This in theory provides the counter-factual comparison missing from earlier attempts to assess success.

Between 2001 and 2008, about £35m a year was spent on subsidising inward investors. The study found that, even after subtracting the inflows that unsubsidised deals suggested were possible, the activities of Scottish Enterprise added 18,000 jobs over the period, at a net cost of £14,000 per job, and £11 to Scotland’s economic output for every £1 spent.

The exports campaign cost about £20m in the four years to mid-2009 and produced an extra £174m of exports, adding £75m to the Scottish economy and creating 1,100 jobs at a net cost each of £11,000.

Other analysts too rate Scotland’s performance in attracting job-creating FDI. Over the long run it has done better than any other region, with a 15.3% share of total FDI-related employment since 1997, says Ernst & Young. (London, the next most successful region secured just 10.6%.) It did less well in 2009, however, with only 7.7% of the new jobs, whereas London more than doubled its share.

It is hard to know how much success or failure falls to the efforts of RDAs, and how much simply reflects the compatibility of local skills and infrastructure with investors’ newest notions of how to make money.

John Tomaney, of Newcastle University’s centre for urban and regional development, is clear that the renewable-energy centre at Blyth, in Northumberland, would probably not have been built without the help of local RDA, OneNorthEast, enticing firms such as Clipper Windpower of California to set up a manufacturing base there. He worries that “the gain in local accountability” from the switch to local partnerships may be “offset by rivalries amongst different local authorities.”

For James Close of Ernst & Young, the important thing is for cities and regions to decide objectively what their competitive advantages are and then work coherently with local development authorities, however constituted, to achieve them, measuring performance unsparingly along the way.

The new government wants to re-engineer an economy long oriented towards financial services and the south-east, and seems unsure what role development agencies or their successors have to play. The debate isn’t over yet.