Economists dispute Scottish claims of attractiveness for foreign investors

Source: Alamy

Skilled workforce: main attraction

Universities Scotland has been accused by economists of “misrepresenting” figures in a report that claims to show the importance of its members in attracting foreign direct investment (FDI).

On 31 August, the body that represents higher education institutions north of the border released a report that states that Scotland’s universities had been cited as a “major determinant in as many as 45 per cent” of such projects.

An accompanying press release puts it slightly differently: universities “play a role” in “close to half” of FDI projects, its headline says.

The report’s evidence for this is a Financial Times survey of FDI projects which found that 39 per cent of those who responded said that a “skilled workforce” was one of the reasons why they set up in Scotland.

Another 6 per cent said they had chosen their location to be near university researchers, according to Grow, Export, Attract, Support: Universities’ Contribution to Scotland’s Economic Growth.

But Nigel Driffield, a professor at Aston University Business School with a research interest in FDI, pointed out that many of the projects “require technical skills that are often non-degree level”.

Therefore, claiming that universities could take all the credit for a skilled workforce in Scotland was making a link “more directly than the data support”, he said.

Another economist, who did not wish to be named, said: “Not for the first time, a press office appears to have misrepresented/hyped up what the report says.”

He added that it was incorrect to add together the percentages of companies who had cited a skilled workforce and the proximity of university researchers “as in many cases these will be multiple [ticks] by the same company”.

Professor Driffield declared that he did not believe that local universities were likely to be much of a draw for companies thinking of setting up in the UK because wherever they chose to base themselves, “Cambridge, Oxford or Imperial is not that far [away]”.

A third economist, who also wished to remain anonymous, said it was “notoriously difficult to decompose growth…into separate areas and attribute to each its numerical contribution”.

But he countered that although the influence of universities was “often intangible” it was also “highly pervasive” and he did not have a “major problem” with the report’s claim.

Alastair Sim, director of Universities Scotland, said: “Our report rightly points out that universities play a direct role in providing Scotland with a skilled workforce, the availability of which is cited as a key motive by 39.4 per cent of foreign companies choosing to invest in our nation.”

A “broad range” of companies had cited graduate skills and university research as factors in their decision to set up in Scotland, he said.

david.matthews@tsleducation.com