This month, a survey by international professional services firm EY showed that Scotland is going against the UK and EU trend for foreign direct investment (FDI) in 2020. As the number of investment projects coming in in Europe and the UK decreased by 13% and 12% respectively compared to 2019, Scotland increased by 6%.
The Scottish government has revised its investment strategy in recent years with the aim of attracting 50 ‘top global companies’ to Scotland, and will be encouraged by further EY findings which suggest that 15% of overseas investors rank Scotland as the most attractive UK location outside of London (i.e. the number was only 7% in 2019). Edinburgh is now the UK’s most attractive city for FDI outside of London, while Glasgow and Aberdeen are also in the top ten.
This may seem like a success for the Scottish Government’s new strategy, which involves the creation of innovation and investment hubs in European cities and the reorganization of Scottish Development International. This can easily be presented as a rationale for the SNP, which has spent years since the Brexit vote obsessively playing Scotland’s open-to-business status, carefully crafting its pitch to investors in a more appealing appeal. wide with the values ââof social openness and progressivism. encapsulated in the “Scotland is now â.
This campaign has sought to emphasize that Scotland does not indulge in the insular and searing political instincts that prevail in the south. However, Brexit still poses deep problems for the SNP’s cosmopolitan economic and social vision. In order to push Scotland back into Europe, the SNP must move the country away from the UK, its largest trading partner and the source of its largest national minority: the British. The UK’s willingness to pursue a growing divergence with the EU may not be the SNP’s fault, but it is its problem, because – as we are now seeing in Northern Ireland – it’s hard to avoid a hard border somewhere.
There are also other complications. Scotland’s success is also part of Britain’s relative success in attracting foreign investment, which has somewhat recovered from the years of uncertainty following the Brexit vote. EY has found that investors see the UK as the most attractive country in Europe for their projects. Scotland, they say, is “well positioned to grab a disproportionate share” of a “resilient pipeline of UK projects”, with investors encouraged by Britain’s successful vaccine rollout and its economic recovery strategy . Perhaps the constitutional sweet spot for Scottish capitalism is where it stands now: a distinctive kingdom of the post-Brexit UK where open society values ââstill thrive, balancing the self-confidence of decentralized nationalism versus the relative size and strength of the British. State.
The “democratic deficit” which tortures Scottish nationalists so much is hardly a problem for international capital. Indeed, by blurring the lines of democratic accountability, decentralization can bolster Scotland’s interest, offering not one but two governments to lobby and play against each other. Here is a country with substantial powers to roll out the red carpet, in terms of grants and other political tidbits of arrival, marked in the progressive rainbow of inclusiveness that attracts smart and inventive young professionals – but without the power and political sovereignty will to call the capital to the step if the public demands it.
This darker underbelly of FDI success in Scotland can also be spotted in EY’s numbers. Manufacturing investment has suffered a “sharp drop” to almost half, from 32 projects in 2019 to 17 in 2020, with Scotland’s share of UK manufacturing investment falling from 24 to 15%. The success of digital and agri-food projects has not been accompanied by a boost in employment: jobs generated by FDI in Scotland have fallen by 30.1% since 2019, falling below average decennial of 4,650 per year. Scotland’s share of UK jobs generated by foreign investment fell, with the country falling to third place behind the West Midlands. The Scottish Government’s new investment strategy calls on investors to share its ‘core values’, including fair treatment of employees and reducing emissions – but if these trends continue, the Scottish model of attracting foreign investment could end up accentuating inequalities and insecurity rather than tackling them. .
It’s part of a larger problem that many people, especially on the Scottish left, have been pointing out for decades. In the 1970s, economist John Firn argued that Scotland was becoming a ‘branch’ economy, with local industries becoming subsidiaries of multinational companies, posing problems not only for economic resilience and responsive local management, but also for democratic control. Addressing this issue has become part of the argument for both decentralization and independence. Yet by the time a Scottish Parliament was established in 1999, Scotland was largely following Britain’s accession to globalization, with Alex Salmond praising countries such as Ireland and Iceland.
Content from our partners
The critique of branch capitalism remains powerful and relevant. In a letter to Financial Time On the Scottish government’s inward investment strategy last year, Professors Colin Mason and Richard Harrison of Glasgow and Edinburgh University Business Schools argued against the Scottish economy being more âLocked into global corporate supply chainsâ. Global corporations, they suggested, are far too powerful to be bound by the âcore valuesâ of national government. These ‘trophy’ investors should not be prioritized over supporting ‘locally owned, managed and headquartered’ companies, which can better deliver the national economic ‘resilience’ the Scottish government claims it wants.
There is another way of saying it, more radical, which is becoming more and more popular within the independence movement. In the independence newspaper the national, Jim Osborne of the nationalist group Scottish Banking & Finance writes that in order for Scotland to “transition to a zero carbon economy as soon as possible” a “very large proportion” of national resources and capital will have to be “routed”[ed]”elsewhere in the economy – an index of the kind of economic autarky that would require in the first place the location and control of a large amount of industry in Scotland. In other words, the achievement of progressive goals and ‘Leading’ Scottish nationalism will demand far more economic nationalism than the SNP currently seems comfortable with.
This is particularly important in the case of renewable energies. In a recent article for Quarterly policy, economic historian Ewan Gibbs criticizes the failure of the Scottish government to turn the country’s considerable renewable energy potential into indigenous industry and jobs, with employment declining as capacity increases. The offshoring of green industries could be reversed, he argues, by subordinating government support to industry – through subsidies and licenses – to the benefits of the national supply chain, an argument that has been made to several times by unions and environmentalists. The SNP’s usual excuse for inaction has focused on EU state aid rules, but Gibbs points to the considerable flexibility of these rules in practice across the EU. They should be even less of a problem now.
This is where political and economic nationalisms directly disagree. Political nationalism depends more than ever on popular disgust with the sovereignist and border closure Brexit project, and the prospect of a return to Europe is vital to increasing support for independence among the wealthiest voters required for a majority. Yet ensuring the fastest and smoothest re-entry possible also requires Scotland to present itself as a diligent rule observer, resisting the post-Brexit temptation to break more clearly from European rules and standards. Like Laurie Macfarlane argued in Open Democracy in 2019 the UK had a remarkably good deal within Europe, with plenty of room to bend the rules. Now that the country is gone, there is little reason to assume that Scotland will receive such preferential treatment, under considerably more difficult circumstances.
In theory, this should present an opportunity for trade unionists. In theory, Westminster could be a source of more democratically responsible and socially conscious ‘foreign’ direct investment than multinational capital, using the wealth that is still concentrated in London to support green jobs and industry rooted in Scotland that would provide inexpensive products. renewable energy across the UK. The devolution of additional borrowing powers and labor law would be vital in this regard. In theory, this could be the economic basis for the âfederalistâ political vision that Labor claims to support. Yet all of this will remain purely academic as long as the brainless ‘muscular unionism’ of the Conservative Party dominates the constitutional horizon, and as long as Labor does not embrace some form of Scottish self-determination – economic, if not political.
Until these things change – and there is little sign that they will – Scotland appears to be trapped in an unenviable binary choice: to consciously jump into the globalized vortex of ‘independence Post-sovereignty and see what we can do with it, or let devolution facilitate the same arm’s length process, at least giving us the comfort of having someone else to blame.