WII0021

Written evidence submitted by Aberystwyth Business School

Introduction

This paper is written in response to the promoting Wales for inward investment inquiry - call for evidence. It focuses on foreign direct investment from the perspective of Mid Wales. Also included are an analysis of the broader online presence of Brand Wales, of Wales as a country seeking to attract foreign direct investment (FDI). The paper concludes with an overview of other countries’ online presence as a location for inward investment and destination for tourism.

Mid Wales faces a number of socio-economic challenges, lagging behind UK and Welsh performance in: productivity (real and per head); a declining and aging population; a narrow economic base Tyfu Canolbarth Cymru/Growing Mid Wales (2022). Significant GVA contributors in Mid Wales are manufacturing, real estate and wholesale and retail Tyfu Canolbarth Cymru/Growing Mid Wales (2022). In employment data agriculture dominates but, contributes comparatively less GVA Tyfu Canolbarth Cymru/Growing Mid Wales (2022).

Research methods

The research for this paper was undertaken via mixed methods. A desk-based research project was undertaken to consider the extant FDI literature, especially the Welsh and UK based literature. Desk research was also undertaken into the grey literature focused on FDI in Wales and the UK. The grey literature included reports published by the UK Government, the Welsh Government, and Wales based local authorities.

The desk-based research was complemented with an email based survey eliciting the views of  the following: Local Authority Communications Directors/Public Relations experts; Mid Wales based business owner/managers; and NGO business development services. Face-to-face discussions with Mid Wales based postgraduate international students (all with international supervisory or management level experience) studying for master’s degrees in international business and marketing (from across Asia. Europe, and the USA) were also undertaken.

Welsh and UK FDI Landscape

In terms of attracting inward investment Mid Wales has largely to rely on UK and Welsh Governments’ efforts to create and implement FDI policy. Recently published academic papers and grey literature have critiqued UK FDI activity. Broadly speaking, to attract FDI into the UK, the papers and reports find that policy and practice need to be further developed. For instance, the UK FDI landscape is considered to be confusing for investors, there seem to be a myriad of potential obstacles inhibiting FDI (GOV.UK, 2023; CBI, 2024; Driffield et al, 2024).

The Department for International Trade (DIT) was criticised for not developing a ‘UK-wide overview of local strengths, including skills, infrastructure and supply chain opportunities, and how it will market these’ activity has focused on the South East of England (National Audit Office, 2023). From a Welsh perspective, the 2023 Harrington Report into UK Foreign Direct Investment sponsored by the Department for Business and Trade, and HM Treasury made no mention of Wales (GOV.UK, 2023). In terms of Mid Wales, the key online investment website for FDI in Wales, ‘Trade and Invest Wales’ focuses its attention south of the M4 motorway and all but ignores the prospects for FDI in Mid Wales (Welsh Government, 2025). A consequential outcome of FDI activity is ‘locking-in’ economically lagging regions into remaining low skill, low productivity, and comparatively low value regions (Driffield et al, 2024). Further, the DIT needs to work in a joined-up way across government and local bodies to present a coherent UK offer to investors (National Audit Office, 2023). There is a lack of policy consistency in the UK, response and planning delays, satisfying complex conditions to access government support, energy grid connection challenges, and skill shortages (GOV.UK, 2023). As stated by Driffield et al (2024a) ‘inward investment is both a cause and a solution to the market failure problem’ Indeed, inward investment can stimulate productivity growth but needs to be targeted in high value employment creation. Collectively, the evidence above does not bode well for the future of the Mid Wales economy attracting FDI.

Given the context of Mid Wales with depopulation (Hogan, 2023) and a long-established university at Aberystwyth creating a ready pipeline of knowledge workers. Driffield et al (2024a) advocate a FDI policy which prioritises quality of employment opportunities created rather than quantity. Preceding Driffield et al’s (2024) paper the UK Government Department of International Trade (DTI) began in 2020 to focus its efforts more closely on attracting ‘high-value, high-impact investments that support government’s wider objectives on levelling up, net zero and innovation’ (National Audit Office, 2023). Such an FDI policy may help to overcome issues of depopulation. Nevertheless, the dilemma facing the UK and Welsh governments, and local authorities is they are under pressure to support the creation of both quantity and quality of jobs. Achieving both simultaneously may be challenging, for instance developments in technology and job creation are considered to be mutually exclusive (Castellani and Lavoratori, 2020).

Indeed, there is evidence to suggest that FDI policy should consider moving away from a national focus to more emphasis on ‘sub-national location specific advantages’ (Driffield et al, 2023). If areas such as Mid Wales can develop location specific advantages, possibly through the work being undertaken at Aberystwyth University’s AberInnovation facility which is designed to accelerate food and drink, circular economy and agri-tech innovation. A sub-national approach to attracting FDI is further supported by Crescenzi et al (2021) who found that sub-national investment promotion agencies were more likely to attract investment. Issues of depopulation in Mid Wales (Hogan, 2023) may further add weight to the argument that governments need to attract the right type of FDI and consequently leverage the benefits over time Driffield et al (2024a). There may be a density of businesses issue in Mid Wales. FDI is typically attracted to areas that have acceptable levels of business density and associated business activity. A consequence of lower business density levels may be supply chain challenges, a dearth of labour market skills and knowledge, or insufficient market availability. The issue of business density may contribute to difficulties in growing business scale. Businesses with a growth trajectory and are sold or merged once they reach a certain size are typically managed outside of Wales.

There are systemic issues that inhibit business growth in Mid Wales. For instance, the Mid Wales energy infrastructure in the form of grid capacity may be insufficient to meet the demand of FDI in the area (Welsh Government, 2024). Such ‘grid poverty’ is a significant challenge to growing the economy in Mid Wales (Clubb, 2018). There are also clean water challenges in mid-Wales, infrastructure limitations result in pollutants being untreated. Finally, policy documents created by Tyfu Canolbarth Cymru/Growing Mid Wales (2020 and 2022) in association with Ceredigion and Powys County Councils make no mention of seeking to attract FDI into Mid Wales. Connectivity in Mid Wales lagging Welsh and UK averages Tyfu Canolbarth Cymru/Growing Mid Wales (2024).

Conclusions and recommendations

The evidence above suggests Mid Wales and FDI are largely ignored in the UK, Welsh and FDI is even omitted from the Mid Wales growth plan. This is partially symptomatic of the disjointed nature of UK Government, Welsh Government, and local authority FDI policy (National Audit Office, 2023 and Driffield et al, 2024). To develop an FDI strategy for Mid Wales will require changes in policy and practice. Areas that an established track record for attracting FDIs tend to continue attracting such investments, whilst areas without a track record (such as Mid Wales) may face a more challenging FDI  landscape Driffield et al (2024a). Economic development, innovation, and productivity increases may result if FDI policies focus on attracting higher value FDI. Consequently, it is more likely that regions would move up the value chain (Driffield et al 2024a). Driffield et al (2024a) argue for an adaptive FDI which is based on a bespoke policy designed specifically for a particular area. Driffield et al (2424) advocate for an integrated policy approach encompassing innovation, investment and skills. An integrated approach embedded in an adaptive policy is arguably more like to create opportunities for FDI to create the right jobs for and area such as Mid Wales. Past government policy to attract sustainable FDI by offering grants, loans, or subsidies has often proved to be ineffective. Driffield et al (2023) counsel away from such approaches and suggest focusing on the adaptive approach suggested above.

In terms of attracting higher value FDI more could be made of extoling the Well-being of Future Generations (Wales) Act 2015. Research has revealed that Welsh businesses are more likely to use language/text online aligned with the Act than business found in England (Hogan et al, 2024). Consequently, the Act could be seen as a differentiator in the international FDI market and employed to enhance Welsh strategic positioning in this market. Similarly, online Trade and Invest Wales and Cymru Wales Brand websites appear as English language only webpages this contributes to a lack of distinctiveness in the FDI market. Finally, Green FDI may be promoted in areas that have a green value proposition (Driffield et al, 2024a). Mid Wales has the long established Centre for Alternative Technology (CAT) located near Machynlleth. The CAT and AberInnovation, working with Aberystwyth University have sustainability as a key driver in their operations. The adoption of green FDI approaches helps to support business and environmental sustainability (Driffield et al, 2024a), which could in  turn create a distinctive offering to the FDI market. Wang et al (2021) suggest screening inward investors to ensure their compliance with a variety of environmental criteria, which will help create industry-wide green FDI sustainability. Finally, for Mid Wales to attract more FDI it needs to increase its profile/viability in UK, Welsh and local authority policy and practice.

An analysis of Cymru Wales Brand, Trade and Invest Wales, Welsh Government, and effective country-based investment promotion websites.

International master’s degree students were tasked with analysing the online presence of Cymru Wales Brand, Trade and Invest Wales, and the Welsh Government. The task focused on students using their international employment (as potential FDI in Wales) as a basis for analysing the websites from the perspective of FDI. Table 1.0 contains a selection of student reflections when viewing the websites. Overall, student comments are positive, but they recognise the global visibility challenges the websites have when seeking to attract FDI.

Table 1.0  Selected summative analysis responses

Interviews and an online survey with local business owner managers and business development NGOs suggests there is a need for Wales (and Mid Wales) to increase its own brand awareness via “investing in a Welsh exposure project for countries overseas”. The television series Welcome to Wrexham, has helped showcased the local environment and people. In many cases this was viewers’ first exposure to Wales and its culture. A similar wave of awareness occurred with the Doctor Who and Game of Thrones series. The “Welsh exposure” project could piggyback Welsh sporting events or TV streams overseas and assist in growing consumer and business awareness of Wales, suggested one respondent.

The Welsh brand is “diffuse and difficult for outsiders to articulate”.  The Welsh identify often subsumed as part of Britain or sometimes a region of England . There is a need to increasingly promote the distinctness of Wales and the role of its culture and language. There are examples of inward investment projects that have not succeeded due to concerns around Welsh language particularly in relation to education. This must be recognised and tackled head on with positive messages delivered around the evident benefits of a bilingual provision. There are misconceptions around the Welsh language , access to relevant skills and in places which have dispersed rural populations, infrastructure challenges and little promotion of regions and regional differences. One respondent stated that “Mid Wales not visible externally at all”. The same respondent observed “other countries  are presenting more  visible and compelling offers”. For example, Ireland has a much higher global visibility than Wales and history of attracting significant global players . Respondents recommended that Wales, like Ireland adopts a more proactive and arguably aggressive approach to attracting investment set against background of a supportive ecosystem  elements of which are not available to Wales (lower corporation tax and access to the EU). Finally, several respondents suggested placing more emphasis online about the geographical advantages Mid Wales has for renewable energy sources.

International examples of effective investment promotion campaigns

Successful inward investment programmes are designed to attract foreign capital, boost local economies, and create jobs. Here are some examples of successful inward investment programmes from different countries:

1.                            Singapore - "Global Investor Program" (GIP)
   Singapore’s GIP targets high-net-worth individuals and business owners. By offering permanent residency to investors who commit to substantial investments (typically in businesses or funds), the country attracts wealthy entrepreneurs and global investors. Singapore’s stable economy, low tax rates, and strategic location in Asia make it an attractive hub for foreign investment.
2.                            Ireland - "Start-up Entrepreneur Program" (STEP)
   Ireland's STEP allows non-EU citizens to gain residency by establishing a business that has the potential to grow and create jobs in Ireland. With favourable tax policies, a skilled workforce, and EU market access, Ireland has become a go-to destination for foreign entrepreneurs, particularly in tech and finance.
3.                            United Arab Emirates - "Golden Visa"
   The UAE’s Golden Visa offers long-term residency to investors, entrepreneurs, and skilled professionals, with a focus on attracting foreign capital into real estate, tourism, technology, and other sectors. This program has bolstered the UAE’s economic diversification strategy, reducing reliance on oil revenues and making it an attractive destination for global investors.
4.                            Australia - "Business Innovation and Investment Program" (BIIP)
   Australia’s BIIP provides opportunities for foreign investors and entrepreneurs to gain residency through investments in the country. The program offers several visa options, including the Significant Investor Visa (SIV), which encourages high-value investments in Australian businesses and startups, particularly in technology, healthcare, and renewable energy.
5.                            United Kingdom - "Tier 1 Investor Visa"
   The UK’s Tier 1 Investor Visa program allows individuals who invest significant sums (typically £2 million or more) in UK businesses or government bonds to gain residency. While the program has been adjusted in recent years, it remains an attractive pathway for foreign investors, particularly from Russia, China, and the Middle East, seeking to expand their business operations or diversify their portfolios in a stable economy.
6.                            Chile - "InvestChile"
   InvestChile, the country’s national investment promotion agency, has been instrumental in driving foreign investment, particularly in the mining, energy, and agriculture sectors. Through tailored support services, tax incentives, and a focus on sustainability, Chile has become one of the top investment destinations in Latin America, attracting multinational corporations and driving growth in its diverse industries.
7.                            South Korea - "Foreign Investment Promotion Act"
   South Korea’s Foreign Investment Promotion Act offers incentives like tax breaks, financial subsidies, and the creation of specialized foreign investment zones to attract foreign companies. Key sectors such as technology, automotive, and chemicals have benefited from the program, making South Korea a top investment destination in East Asia.
8.                            Canada - "Global Talent Stream"
   Canada’s Global Talent Stream is designed to attract highly skilled workers to fill critical talent gaps in the technology, engineering, and finance sectors. By offering fast-track work permits and residency options for both employers and employees, Canada has successfully drawn top talent and innovative businesses to its economy.

The inward investment programs listed above share common strategies such as offering incentives, providing streamlined regulatory processes, and fostering a favourable business environment. They showcase the importance of aligning policies with global trends and capitalizing on a country's unique advantages to attract sustained foreign investment.

Online campaigns designed to attract visitors

1.                            Australia - "There’s Nothing Like Australia"
   Australia’s tourism campaign, "There’s Nothing Like Australia," highlights the country's natural beauty, unique wildlife, and vibrant cities. The campaign includes iconic visuals of the Great Barrier Reef, Uluru, Sydney Opera House, and more. It emphasizes adventure, relaxation, and cultural experiences, appealing to diverse tourist interests, and has contributed to Australia’s status as a top global travel destination.
2.                            New Zealand - "100% Pure New Zealand"
   Launched in 1999, the "100% Pure New Zealand" campaign focuses on the country’s unspoiled natural environment. Through captivating imagery of mountains, forests, and lakes, the campaign has positioned New Zealand as a haven for nature lovers, adventure seekers, and outdoor enthusiasts. It effectively conveys the country’s commitment to sustainability and eco-tourism.
3.                            Iceland - "Inspired by Iceland"
   Iceland’s "Inspired by Iceland" campaign showcases the country’s dramatic landscapes, geothermal hot springs, and unique cultural heritage. The campaign uses a mix of social media, influencer partnerships, and quirky videos to create a sense of mystery and adventure. By highlighting both nature and Iceland’s thriving arts scene, the campaign has successfully made the country a trendy destination for travellers seeking both adventure and culture.
4.                            Japan - "Japan. Endless Discovery"
   Japan’s tourism promotion focuses on the country’s blend of ancient traditions and modern innovation. "Japan. Endless Discovery" highlights experiences like traditional tea ceremonies, cherry blossom viewing, and the bustling metropolis of Tokyo. The campaign taps into the allure of Japan’s rich history, while also promoting modern attractions like technology, shopping, and cuisine, appealing to a broad audience.
5.                            Spain - "I Need Spain"
   Spain’s "I Need Spain" campaign emphasizes the country’s diversity, from its beaches and historic cities to its lively festivals and culinary offerings. Spain is marketed as a country that provides a mix of culture, history, food, and entertainment. The campaign is often accompanied by captivating imagery of Spanish architecture, cuisine (especially tapas), and Mediterranean coastlines, drawing tourists seeking both relaxation and cultural immersion.
6.                            Thailand - "Amazing Thailand"
   Thailand’s "Amazing Thailand" campaign promotes its exotic beaches, vibrant cities, ancient temples, and rich cultural experiences. The campaign appeals to a variety of travelers, from those seeking a tropical beach holiday to those interested in culture, wellness, and adventure. It highlights the country’s affordability, diverse attractions, and warm hospitality, making it a popular destination in Southeast Asia.
7.                            Dubai, UAE - "Dubai. The United Arab Emirates"
   Dubai has marketed itself as a luxury destination with its "Dubai. The United Arab Emirates" campaign. The city is positioned as a futuristic, glamorous place with a wide range of luxury shopping, fine dining, world-class hotels, and cutting-edge architecture (e.g., the Burj Khalifa). Dubai also emphasizes family-friendly attractions like theme parks and cultural experiences to appeal to a global audience.
8.                            South Africa - "Go Wild"
   South Africa’s "Go Wild" campaign promotes its rich wildlife, safari experiences, and stunning landscapes. It highlights iconic destinations like Kruger National Park, Cape Town, and the Garden Route. The campaign positions South Africa as a top destination for eco-tourism and adventure, targeting nature enthusiasts and thrill-seekers.
9.                            Switzerland - "I Need Switzerland"
   Switzerland markets itself with the tagline "I Need Switzerland," focusing on its picturesque mountain landscapes, outdoor sports (e.g., skiing, hiking), and luxury travel offerings. The campaign positions Switzerland as an escape for those seeking tranquillity, nature, and adventure, with an emphasis on relaxation and outdoor exploration in pristine environments.
10.                        Canada - "Keep Exploring"
    Canada’s "Keep Exploring" campaign invites travellers to discover its diverse landscapes, multicultural cities, and natural wonders. The campaign promotes the country’s outdoor adventures, from hiking in national parks to exploring vibrant cities like Vancouver and Toronto. By emphasizing Canada’s friendliness and inclusivity, it appeals to a wide variety of international visitors seeking unique and enriching travel experiences.

These marketing strategies effectively highlight the countries' distinct identities and attractions, using powerful visuals, social media engagement, and storytelling to create an emotional connection with potential visitors. They focus on evoking curiosity, adventure, relaxation, and cultural immersion, making each country stand out as a desirable travel destination.

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10 February 2025