SELLING WALES: - Cardiff Business School - Cardiff University

INWARD 

INTERACTION 

INVESTMENT 

SERVICES 

COMPETITION 

MARKETING 

CAPITAL 

COMMUNICATION 

EXPERIENCE 

CULTURE 

RESOURCES 

PERFORMANCE 

BUSINESSES 

PLACE 

BRAND 

DISCUSSIONS 

WALES 

TARGETS 

PEOPLE 

ONE 

WORK 

SELLING 

WALES: 

THE ROLE OF AGENCIES 

IN ATTRACTING INWARD 

INVESTMENT 

CARDIFF 

CARDIFF 

GOVERNMENT 

PEOPLE 

CARDIFF 

BUSINESS 

SCHOOL 

WELSH 

APPROACH 

SHARED 

SKILL 

ACTIVITIES 

CARDIFF 

BUSINESS 

PARTNERSHIP 

COORDINATION 

POLICY 

OPPORTUNITIES 

DIFFERENT 

INVOLVED

2 

SELLING WALES: THE ROLE OF AGENCIES IN ATTRACTING INWARD INVESTMENT 

EXECUTIVE SUMMARY 

KEY 

FINDINGS 

This study set out to explore how the 

agencies which promote inward investment 

operate in Wales, with a particular focus on 

Cardiff. The research involved face-to-face, 

semi-structured interviews, focusing on the 

workings of the agencies. This information 

was supplemented with questionnaires sent 

to firms and to politicians who were unable 

to take part in face-to-face interviews. 

The research highlighted a number 

of problems in terms of structure and 

organisation across the agencies within the 

Cardiff city region. 

It appears that there is some consensus on 

what is wrong and what needs to change but 

that there has been little clear action to date. 

The number of agencies involved in attracting 

inward investment in the region creates a 

complex picture. One agency’s work naturally 

overlaps with another. This report shows, 

however, that there is a lack of coordination in 

the promotion of services. Although some of 

the agencies have wider remits than others, 

and some do work closely together, there 

needs to be more structured coordination to 

better use resources. 

1. WORKING BETWEEN AGENCIES: there is a lack 

of coordination between different agencies. 

Competition between some agencies creates 

unhealthy effects. 

2. THE BRAND: the perception amongst 

staff of differing messages within the same 

geographical area has resulted in confusion over 

who does what and where remits of certain 

agencies cease and others begin. There is also 

the danger of sending confusing or conflicting 

messages to potential investors. 

3. LIMITED RESOURCES: in some agencies, limited 

budgets prevent large scale strategic marketing 

and result in shorter, one-off campaigns. This 

targeting, particularly in terms of sectors, has 

some advantages but results in uncertainty in 

what to do with potential investments from 

outside key sectors. 

4. IMPETUS FOR CHANGE: there is evidence of 

some coordination between public and private 

partners in promoting Wales as a destination for 

inward investment but there is acknowledgment 

that some aspects of the process need to 

change and that improvements can be made. 

RECOMMENDATIONS 

DEVELOPMENT OF A STRONGER 

“WELSH BRAND”: both Cardiff and Wales would 

benefit from a stronger and more coherent 

brand image which is supported by all agencies 

and allows a greater coordination of the use of 

resources. 

IMPROVED COORDINATION: there needs to be a 

clearer remit for individual agencies but also an 

improved structure whereby joint projects can 

be executed and contacts shared. 

CONSISTENCY IN POLICY BEYOND TARGET 

SECTORS: the Welsh Government needs to 

develop a consistent policy, supported by all 

agencies, regarding attraction of investment 

from outside key sectors. This is about improving 

responsiveness to enquiries made by firms 

which do not fit into sector teams.

CARDIFF BUSINESS SCHOOL AND CARDIFF BUSINESS PARTNERSHIP 

3 

CONTENTS 

INTRODUCTION 4 

BACKGROUND: FDI ATTRACTION IN WALES 

4 

THE RESEARCH 

6 

FINDINGS 

8 

INTERACTION BETWEEN AGENCIES 

8 

COMPETITION BETWEEN AGENCIES 

9 

MARKETING OF WALES/CARDIFF 

10 

MISCOMMUNICATION 

11 

THE CASE OF SCOTLAND 

12 

R&D 

12 

AGGREGATE NUMBER FOR FDI INFLOWS 

12 

CONCLUSIONS 

14 


15 

REFERENCES 

16 

ANNEX 

17

4 


INTRODUCTION 

TO THE RESEARCH 

This report assesses the agencies (and attendant 

infrastructure) charged with attracting inward 

investment in the Cardiff City Region. Since the 

amalgamation of the Welsh Development Agency 

(WDA) with the Welsh Assembly Government 

(now the Welsh Government) in 2006 there has 

been a fluid support structure. This report aims to 

understand the role of different inward investment 

agencies, how they work and how they interact. 

The study was carried out by conducting in-depth, 

semi-structured interviews with those working in 

agencies, the Welsh Government and companies. 

Questionnaire and secondary data were also 

evaluated. This report presents a picture of the 

structures based on the experience of those doing 

the job rather than the formal organisational 

structure. While the goal of this work is not to 

present a trend analysis of global Foreign Direct 

Investment flows, some background data on the 

region are included to give a representation of its 

current inward investment performance. 

The work was carried out by Cardiff Business 

School on behalf of the Cardiff Business Partnership 

during May 2011 to October 2011. All interviews 

were confidential to ensure that respondents felt 

comfortable giving their honest opinions on the 

current structures and practices. 

BACKGROUND: 

INWARD INVESTMENT 

ATTRACTION IN WALES 

Attracting inward investment is one objective of an 

economic development authority. New firms entering a 

region create economic churn; this rejuvenates ideas and 

brings much needed capital to local firms. How this task is 

undertaken by governments, agencies, and/or individuals 

is not a precise science and the academic or policy 

literature reports little consensus on the “correct” approach. 

From an inward investment promotion perspective, Wales 

has undergone a marked change in the last decade. In 

2006 the Welsh Development Agency (WDA) merged 

with the Welsh Government: this merger led to the 

retirement of the WDA brand and the introduction of a 

Welsh Assembly Government (now Welsh Government) 

brand for inward investment, International Business Wales 

(IBW). Since this date a number of agencies, which had 

been operating during the time of the WDA, have taken 

a greater role in attracting inward investment, particularly 

from the rest of the UK and Europe. It must be noted 

that other agencies were involved in inward investment 

attraction during the time of the WDA, but were very much 

in supporting roles. The Welsh economy, in the 1990s and 

early 2000s, was seen as a major player in the European 

regional development arena, attracting 15% of all foreign 

investment coming into the UK during the early 1990s 1 . 

The high profile Oxford Intelligence report is compiled 

each year on a given sector’s investment strategies. In 

2011, a study of biotechnology, pharmaceutical and 

medical technology companies worldwide examined 

the role of economic development agencies in assisting 

investment. The study’s credibility is not in doubt with indepth 

company interviews carried out at Chief Executive 

Officer, Chief Financial Officer and Senior Vice President 

level, providing the vital corporate view. A key finding 

was that even in 2011, the WDA was still the second most 

recognised development agency brand in Europe, a quite 

startling finding given its non-existence since 2006. 

It is therefore important to evaluate how well Wales has 

done in attracting inward investment since the closure of 

the WDA. 

1 

http://www.publications.parliament.uk/pa/cm201011/cmselect/cmwelaf/writev/inwardin/iiw15.htm


5 

WALES AND THE UK IN THE INWARD INVESTMENT GAME 

Welsh and global inward investment 

flows have seen a steep downturn 

over the last decade. What has been 

disappointing for Wales is that there 

appears to have been a continuous fall 

in levels since 2003. There is a further 

concern for Wales; this is the improving 

performance of other regions in the UK, 

particularly Scotland, whose activity 

during the late ‘90s was far below Wales' 

but has now improved to lead the UK 

(outside London). 

If the figures are considered in terms 

of overall inward investment projects 

won, Scotland has become the number 

one ranked region in the UK (excluding 

London). At the same time Wales has 

gone from number two in the UK in 

2003 to second from bottom in 2010. 

Table 1 shows Welsh performance 

compared to all regions. 

Some background needs to be given 

when contrasting the performance 

of Wales with other regions. Figures 

published by the Welsh Assembly 

Government (WAG 2010) suggest 

that the number of "foreign owned 

enterprises active in Wales" is smaller 

than that in any English region. There 

were around 1000 in 2007, rising to 1100 

in 2009 and falling back to 1000 in 2010. 

They employed around 139,000 people 

in 2010, 11,000 fewer than in the peak 

year, 2009. 

TABLE 1: PERCENTAGE OF UK INWARD INVESTMENT PROJECTS** WON 

(EXCLUDING LONDON) 

*SOURCE: UKTI AND FDI MARKETS FROM THE FINANCIAL TIMES** THIS IS NEW INVESTMENTS. 

WEST MIDLANDS 

2003-04 AV % 4.5 

2005-10 

AV % 5 

RANK 4 

RANK 3 i 

SCOTLAND 

2003-04 AV % 8.5 

2005-10 

AV % 9 

NORTH EAST 

NORTH WEST 2003-04 AV % 3.5 

2003-04 AV % 6.5 RANK 3 

2005-10 AV % 3.7 

2005-10 

NORTHERN IRELAND 

2003-04 AV % 4 

2005-10 

AV % 4.3 

AV % 6.8 

RANK 5 

RANK 4 i 

RANK 2 i 

RANK 1 

RANK 1 - 

RANK 6 

RANK 5 i 

YORKSHIRE & HUMBER 

2003-04 AV % 2 

2005-10 

AV % 3.7 

EAST MIDLANDS 

2003-04 AV % 3.5 

2005-10 

AV % 3.5 

RANK 9 

RANK 6 i 

RANK 8 

RANK 8 - 


2003-04 

2005-10 

AV % 7.5 

AV % 3.5 

RANK 2 

RANK 9 g 

SOUTH WEST 

2003-04 AV % 3 

2005-10 AV % 3.3 

RANK 6 

RANK 10 g 

EAST ANGLIA 

2003-04 AV % 2.5 

2005-10 AV % 3.7 

RANK 8 

RANK 7 i

6 


THE RESEARCH 

The aim of the analysis was to 

interview key personnel from 

all the agencies involved in 

inward investment attraction 

to the Cardiff city region. 

It became clear that there 

is a delineation of control 

and activity. Therefore the 

interviews needed to be 

undertaken across agencies 

at different spatial levels in 

order to establish why certain 

tasks were taking place. Table 

2 gives a profile summary of 

the respondents involved and 

Figure 1 shows the relationship 

between the agencies 

operating within the Cardiff 

city region. 

PRACTITIONER* 

KEY POINT 

METHOD 

LACK OF COMMUNICATION 

INTERVIEW 

15 

TABLE 2: PROFILE OF RESPONDENTS 

*SOME OF THESE RESPONDENTS ARE NO LONGER WORKING IN THE AGENCIES, BUT WERE IN THOSE ROLES 

DURING THE PERIOD (2004-2011). 

FIRM 

KEY POINT 

METHOD 

6 

MISINFORMATION 

INTERVIEW / QUESTIONNAIRE 

5 

GOVERNMENT / COUNCIL 

KEY POINT 

METHOD 

CONSISTENCY IN COMMUNICATION 

INTERVIEW / QUESTIONNAIRE 

POLICY IMPLEMENTATION* 

KEY POINT LACK OF RESOURCE 

METHOD INTERVIEW 

12 

FIGURE 1: AGENCY STRUCTURE 

* AGENCIES HAVE BEEN CODED A-G FOR THE PURPOSES OF CONFIDENTIALITY 

** ARROWS REPRESENT COMMUNICATION FLOWS IDENTIFIED BY RESPONDENTS. 

WELSH GOVERNMENT 

CARDIFF COUNCIL 

IBW 

DEPARTMENT OF ECONOMY 

AND TRANSPORT 

CARDIFF AND CO 

CAPITAL WALES 

UKTI


7 

ATTRACTING 


COMPETITION 

AMONGST AGENCIES 

Since the 1960s and the true advent of globalised 

multinationals, there has been critical debate 

amongst scholars and practitioners alike on 

how best to attract inward investment. During 

the early ‘90s, Europe saw vast numbers of firms 

moving into nations to take advantage of the 

growing wealth of the trading bloc. The impact 

of inward investment on local economies has 

been studied in some depth with the notable 

works of Hill and Munday (1992), Blomstrom 

et al (2000) and Driffield (1999) identifying the 

impact of firm “spillovers” on local development. 

With these advantages of inward investment 

accepted by politicians, many governments 

concerned themselves with developing inward 

investment friendly policies. During the early ‘90s, 

firms’ location decisions appeared to be driven 

purely by economic factors, with “winning” regions 

offering the lowest possible cost base through 

both tax incentives and grant schemes (Bellak and 

Leibrecht, 2005). 

During the early ‘90s Wales was seen as a highly 

successful region in attracting inward investment 

- its low cost base and English speaking work 

force were seen as critical factors in its success 

(Cooke and Morgan, 1998). As relative operating 

costs began to rise the firms once flocking to the 

country began to leave. They were drawn first to 

Eastern Europe. Over the last decade, the growth 

of China and India as power houses of low cost 

business has meant developed regions in Europe 

have had to compete even harder to attract firms. 

Today, policies to attract inward investment into 

developed nations vary by locality yet there are 

some common practices identified by Guimon 

(2009) with a strong focus on highly skilled work 

forces and local amenities. As a result, it has 

been accepted that “marketing of place” plays 

an important role in attracting investment in 

developed nations, over and above tax incentives. 

With large numbers of regions and countries all competing for inward 

investment, intense competition has arisen between agencies. With so 

much to gain, pressure has been put on governments (and economies) 

to be as competitive as possible. This pressure is a double edged sword as 

although it can lead to efficiency and productivity improvements, too much 

pressure can generate a so called “race to the bottom”. Here nations trying 

to reduce wage bills and offering more competitive (expensive) packages 

of support can effectively produce poor welfare outcomes. Charlton (2003) 

provides a useful framework to understand this competition for inward 

investment. 

FIGURE 3: CHARLTON'S FRAMEWORK 

INVESTMENT POACHING 

DOMESTIC WELFARE GAIN? 

INTERNATIONAL WELFARE 

LOSS? 

BEGGAR THY NEIGHBOUR 

DOMESTIC WELFARE LOSS? 


LOSS? 

HEALTHY COMPETITION 

DOMESTIC WELFARE GAIN? 


GAIN? 

WINNER’S CURSE 

DOMESTIC WELFARE LOSS? 


GAIN? 

The matrix describes the associated consequences of different types of 

inward investment strategy. For example, if a region attempts to take an 

investment from where it is naturally more efficient, the overall economy 

will suffer while a smaller area may benefit (top left corner). Although the 

original matrix allows comparisons between regions it is also possible to use 

it to analyse investments within the same region. If one agency attempts 

to offer incentives over and above another agency, the result is a loss of 

overall welfare of the region (bottom left corner). This competitive analysis 

of inward investment suggests that while some competition is healthy, too 

much can create substantial welfare losses.

8 


FINDINGS 

FROM THE RESEARCH IT 

WAS POSSIBLE TO IDENTIFY 

FIVE CORE AREAS OF 

CONCERN EXPRESSED BY 

THE RESPONDENTS. 

THESE ARE: 

INTERACTION BETWEEN 

AGENCIES 

PERCEPTION OF 

COMPETITION: CARDIFF 

VS WALES 

MARKETING OF WALES/ 

CARDIFF 


COMPARISON WITH THE 

CASE OF SCOTLAND 

INTERACTION BETWEEN AGENCIES 

When there are numerous agencies involved 

in similar work and they are operating within 

the same area there will inevitably be overlap. 

However, given constrained resources and 

continuing competition from other regions 

and nations, a degree of interaction would be 

expected to help improve the services offered. 

The research found that some agencies do work 

closely with one another through face-to-face 

contact or quarterly update meetings. Others 

appear to operate more independently which 

has created a degree of perceived competition 

between some agencies. There is the perception 

that competition has created a “two tier system” 

as described by a respondent, whereby larger 

funded bodies can pick up firms originally 

contacted by smaller agencies. 

This interaction, or lack of interaction, has led to 

distrust between agencies and has resulted in 

further disassociation of activities. Contact lists 

are maintained by all agencies and respondents 

indicated that there is a great deal of protection 

of these lists, as they are “hard got”. Due to 

the limited resources that exist (with agencies 

having their budgets cut), some have sought 

to work with others but there appears little 

impetus for this to take place. 

“We have worked hard on marketing 

and have established a successful 

product with limited resources, when 

other agencies ask to work together 

we have to ask, what are we gaining 

from this? Often it appears that [they] 

simply want to link themselves to what 

we have created without indicating 

what we can gain from this.” 

This was not an isolated opinion: agencies are 

protective of their image and felt that linking 

to another without a clear rationale would be 

pointless. Those agencies which are seeking 

to work with others acknowledge their own 

weakness. They accept that their brand is not 

as strong as others and that without a greater 

degree of interaction there will be little they 

can achieve in the long run. This attitude was 

shared by all respondents from smaller agencies 

and there is an acceptance that change is 

needed. Given this, the question was posed: do 

these small agencies still have a part to play in 

investment attraction? The consistent response 

back was that they have experience and 

knowledge which is difficult to replace but have 

inadequate resources to make a greater impact. 

ONE RESPONDENT SAID: 

“In the past three years we have attracted in firms, 

we have corresponded with numerous firms and 

have built up strong relationships which have 

resulted in investments into the country. However 

we struggle to get our name out there, and we rely 

on contacts passed from agency C and agency A, 

our “brand” if you will is not out there.” 

One of the other major issues with interaction 

was the silos that exist between different 

agencies. Both government policy and structure 

have created a great deal of confusion among 

agencies over boundaries and responsibility. 

The size of inward investment is one of the 

biggest distinguishing factors for some agencies. 

One agency had a remit to only look after 

investment up to a certain size and above 

this they had to pass contacts on to another 

organization.


9 

PERCEPTION OF COMPETITION BETWEEN AGENCIES: CARDIFF VS WALES 

Poor interaction has bred competition between agencies. 

Competition can be seen as positive in some cases but not to the 

detriment of the overall goal. It is difficult to gauge the level of 

competion. A number of respondents indicated that there were 

significant issues when it came to cultivating contacts received. 

There is a view that once initial relationships are formed the "hand 

holding" job ends and some agencies are expected to withdraw, 

yet there is a significant belief that this approach does not yield 

the best results: 

“In some cases we are encouraged to pass 

over the files of contacts to agency B, this 

is done as they are seen as the stronger 

and have more resources and experience. 

The problem is that firms do not want 

that, they just want one port of call for all 

dealings, switching between agencies does 

nothing except confuse those involved.” 

This viewpoint was also expressed by other agencies and reflects a 

more complex underlying structure. For example, firm 1, which was 

looking to invest in Wales, was working with one agency but got 

passed to another and was given inaccurate information conflicting 

with what the first agency had told them: 

“We were looking to develop a small project 

in Wales. We had been having productive 

consultation with agency C but were then 

transferred to agency B…. the dealings we 

had were difficult, we ended up having to 

almost start from scratch, explaining what 

we were looking to do .. in the end this was 

taking up too much time, we could not afford 

to hang around, we instead chose to go to 

Newcastle.” 

When this was put to agency C there was an acknowledgment of 

the mistake and an acceptance of the fact that the current system 

needed adjusting and currently creates more complexity for the firm. 

“We need to make ourselves “visible” and 

I mean visible in every sense of the word, 

we need to be so easy to contact and 

communicate [with] on a daily basis that 

firms can reach us all the time. The present 

system has created too many silos, this 

means from the outside it looks like we don’t 

speak to each other and that we are not on 

the same page, the problem is not that, the 

problem is that we were told to operate in 

this manner.” 

This view shows the internal complexity and the politics involved 

in operational decisions. It appears that there are numerous 

scenarios where this has happened and each time it reflects an 

ingrained notion about how an agency should operate rather 

than what is best for the client (the firms) or Wales. It must also be 

noted that not all those involved are so rigid with their operations 

and some are more open to developing better coordination of 

services to improve overall performance: 

“We are more than happy to work with others. 

Over the course of the last year there has 

been a process of evaluation of services and 

we accept that things could be done better. In 

an ideal world those who are good at doing 

something should concentrate on that, that 

way we build experience and knowledge.”

10 


MARKETING OF WALES/CARDIFF 

There was a consensus that inward investment activity is 

marketing activity. This includes the marketing of general 

locations, marketing of individual cities, and of Wales. To attract a 

business to any location, it is essential to portray the best aspects 

of what the place has to offer and importantly that it be seen as 

a good place to live. Divisions lie between respondents in how to 

communicate this image. 

This study has focused on the Cardiff city region, but two of the 

agencies involved in the research (A and B) are both national 

operators. There is a very clear message from agency B that Wales 

has not been marketed well over the last two years. There is an 

admission that Wales has been seen as being “closed for business” 

and an acknowledgment that other regions of the UK, notably 

Scotland, have taken advantage of this. 

“Our marketing has been in a process 

of transition over the last number of 

months. There has been some scale back 

from initial planned action and that has 

resulted in an about face turn. Don’t get 

me wrong, it is not that we have not 

been trying to attract inward investment 

but there has been a lot of effort on 

attracting certain types of investment.” 

This view of ‘selective attraction’ is shared by a number of the 

agencies but many found that this approach was causing a great 

number of problems in terms of marketing. All agreed that focus 

was important when dealing with limited resources but some 

suggested that too narrow a focus meant that marketing was 

ineffective. 

Another area of concern is that respondents in different agencies 

said that previously there had been overlaps in advertisements, 

with different agencies promoting different aspects of Wales/ 

Cardiff in the same publication. 

“There was one example around the time of the Ryder 

Cup, we had put a sizeable advertisement into a North 

American trade publication. When we got a copy of 

the publication (after the competition) another advert 

appeared on the page opposite from a local authority 

in another part of Wales. I am all for competition 

but there must be a line, whereby when advertising 

globally we are all seen to be pulling together not 

pulling apart.” 

There was again a consensus among all agencies that Wales 

(during the late ‘90s and early 2000s) had established a bold 

image internationally, but that in recent years this brand had 

become less prominent and had lost value. This concept of ‘brand’ 

was raised by a number of the respondents, who have since left 

their posts but who questioned what had happened to the old 

WDA brand: 

“I think that the WDA had a lot of things 

wrong with it at the end, in particular the 

structure, it was too bloated, just too big. 

However the brand was still worth a lot, I 

have been all around the world and I still 

hear companies talking about the WDA. In 

fact I would suggest the brand is still worth 

a lot, so let’s use it.” 

This one respondent’s view was shared in some shape or form by 

a number of respondents: however few wished to go into detail 

about the WDA. It seemed to be a contentious subject for any of 

those involved in inward investment work. 

Although criticism was levelled at the WDA many respondents 

felt that the marketing of Wales has been less effective since its 

merger into the now Welsh Government.


11 


Communication was a topic of much concern for respondents 

and was touched on in almost all discussions, even those related 

to other subjects such as interaction or marketing. It must be said 

that communication issues were found both between agencies 

and within the external community the agencies work with, that 

is prospective investors in Wales. 

When looking first at formal communications between 

agencies there is a clear divide between the larger and smaller 

agencies. Many respondents said that there is “one directional“ 

communication, reflecting the protective nature of some. 

For example, the strategy of agency E contains details of on-going 

discussions and collaborative activities. When questioned about 

this the agency concerned said that presently this was only “one 

direction” interaction. 

“Going forward we need to plan better, there is a need for 

a more joined up approach to link together services and 

to let each other know what the other is doing. There is 

no point in not sharing information, all we are doing is 

wasting our time “fishing” in the same pond. To this point 

we have struggled to get meaningful communication 

between ourselves and agency D.” 

In terms of indirect communication, that is general 

communication between all those involved, there was little 

similarity between agencies. Some had regular updates on the 

other agencies’ work, while others were far more independent 

and had few if any dealings with the others. 

“I don’t like to use the word miscommunication but it seems the most appropriate. 

Since 2005 with everything that happened around that time, inward investment was 

beginning to get harder to attract, more agencies were learning the tricks of the trade. 

I spoke with people in the SWD (South West Development Agency) who had been looking 

at Wales for a number of years and thinking they could not compete with us, suddenly 

they started advertising more. Why has this happened? Miscommunication or lack of 

communication, we stopped telling the world how good we are, more importantly we 

stopped working together.” 

This view has been expressed by other respondents who 

acknowledge a lack of communication taking place and its effect 

on external communications. 

Communication comes up again in other contexts, primarily in 

terms of miscommunication of both policy and offering. Authors 

contacted a number of companies which have either invested 

in the Cardiff city region or which were considering investing. 

The experiences of companies were very different depending 

on agencies, the sector they were coming from, and the 

investment size. Overall there was a great deal of variability in the 

communications that took place. 

Some firms described the “great service” they had and the “direct 

line” to the people that can make decisions. This positive response 

was from an SME who was coming to Wales. They were also 

operating in one of the Welsh Government's target sectors: 

“Everything went well, we had good contact right from the start, 

[and] there was a single port of call who dealt with the process. We 

were offered a great deal of support in terms of the operational side of 

moving to [the location]. We were only looking at the Welsh site during 

the process as two of our key contacts are already located in the area. 

Having only visited Wales once or twice I thought it was very useful 

to get local insight, only problem was the length of time it took to get 

through the processes but other than that I can’t complain.” 

This experience was not shared by a firm operating outside the 

target sectors but of a similar size and larger investment than that 

of the first: 

“To be honest it was confusing, we dealt with agency B 

to begin with, it was difficult to get some answers to 

what we thought were simple questions. We spoke at 

length to the contact we were given and after a number 

of emails and phone conversations we were passed to 

agency A. The most annoying thing was that one did not 

tell the other our full situation; we were given different 

information by one group over the other. We also seemed 

to get tangled up in some internal “issues”, we kept getting 

redirected and brought around the houses. We are not a 

large firm, we don’t have lots of staff dealing with this, it 

was me, [and] I got frustrated with the lack of progress so 

thought we should move on.” 

This view highlights the significant internal confusion that exists 

around the notion of sectors. The miscommunication and 

misinformation regarding the policy is rife. One respondent made 

the comment: 

“If you are in computer game design what sector 

are you in, creative industries or ICT?” 

Others too expressed the view that there was some lack 

of communication on how to prioritise inward investment.

12 


THE CASE OF SCOTLAND 

A number of individuals 

contrasted the poor 

performance in Wales with the 

relative success that Scotland 

has had in the recent past. It is 

useful to look at the Scottish 

case to put these comments 

into context. Existing data on 

Scottish inward investment 

attraction have been examined 

to show trends over the 

course of the last eight years. 

Respondents’ comments 

on the work of SDI (Scottish 

Development International) 

have also been analysed. 

INWARD 

INVESTMENT, 

WALES V SCOTLAND 

NUMBER OF R&D INWARD INVESTMENT PROJECTS 

*AUTHORS' CONSTRUCTION, DATA ACCESSED FROM OFFICE OF NATIONAL STATISTICS (ONS) 

20 

15 

10 

5 

0 

9 

2 

7 

1 

3 

2 

4 

2 

8 

10 

12 

16 

5 2 

5 

1 

6 

9 

14 

3 

There are two sets of data to 

contrast. First is the type of 

inward investment actually 

being attracted. To this end this 

research contrasts the figures 

on R&D investment. This is 

high value activity associated 

with the greatest economic 

spillover to the wider economy. 

The second measure is the 

aggregate numbers in terms 

of actual projects that have 

chosen to invest. 

KEY 


SCOTLAND 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 

% OF INWARD INVESTMENT PROJECTS AGAINST UK TOTAL 

*AUTHORS' CONSTRUCTION, DATA ACCESSED FROM OFFICE OF NATIONAL STATISTICS (ONS) 

11 

12 10 

10 

9 

9 

9 

10 

8 8 

7 

8 6 6 6 

5 

9 

6 

5 

7 

3 3 

4 

2 2 

2 

0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


13 

If we look at the two nations there are similar 

trends across the period. Although there were 

significant declines between 2004 and 2005, the 

Scottish bounce back has been much greater than 

Wales' and the flows have held up well during the 

period 2007-2009. 

There has been a positive trend in Scotland in 

terms of both numbers and value, in particular 

in the most sought-after sector, global financial 

services 2 . A number of respondents from different 

agencies argued that the Scottish model was 

successful at the expense of the Welsh: 

“Over the last three years we have 

seen the SDI [Scottish Development 

International] ramp up their overseas 

work, they have a very clear goal of 

where they want to be and how they 

want to get there, and it seems to me 

that this pressure has possibly caused 

a squeeze on some of the targets we 

originally had. IBW could not compete 

with them, it is too slow, everything 

has to be double checked and put 

through too many people’s desks.” 

Another respondent expressed a similar view. 

“Why is Wales in general not 

attracting as much FDI? 

Short answer, Scotland, long answer 

organisation. Scotland is streamlined, 

they are very efficient. I know guys 

working there, they are very savvy 

and more importantly than that 

they know people in UKTI [United 

Kingdom Trade and Invest]….. they 

have an office we don’t.” 

Scotland has also been accused by some 

respondents of “copying” a similar approach in 

terms of branding to that used by the WDA during 

the mid ‘90s. 

2 

http://www.ukti.gov.uk/uktihome/media/news/100745.html 

SDI has reportedly advertised heavily in overseas 

markets where Wales was once strong, namely 

the USA and the Far East. There is also a common 

belief that Wales in general will struggle for the 

foreseeable future against such a strong brand.

14 


CONCLUSIONS 

This report has analysed the views of 

those who are or have been involved 

in attracting inward investment to 

Wales. It has looked across multiple 

agencies with different remits to try 

and piece together the infrastructure 

that exists in Wales at the present 

time. There is a consensus that 

change needs to happen; all agencies 

acknowledged this and would 

welcome it. The market for inward 

investment has shifted dramatically 

in the last 10 years. In the last five 

in particular, with more proactive 

strategies by development agencies 

across the UK and Europe, the need 

for more targeted and intensive 

marketing has become greater. 

Wales has some key assets at its disposal and there 

is valuable experience and expertise in all of the 

agencies currently operating in the Cardiff city 

region but, at the moment, it appears that these 

agencies are greatly fragmented and disjointed. 

There is a lack of cohesion in operational and 

strategic coordination of services. Some agencies 

have done very impressive jobs given the limited 

resources available to them. An example of this is 

the work of agency C, which has been developing a 

scheme whereby successful Welsh business people 

are recruited to promote the area. 

There appears to be some difficulty with the 

overarching brand of Wales, with different agencies 

saying different things. There is a continual pressure 

to attract inward investment and yet there is no 

clear coordination of activities. 

The Welsh Government has undertaken a number 

of reviews and reorganisations over the last few 

years but, given the devolved agencies' activities, 

there needs to be a greater emphasis on joining up 

services. 

The sector ‘approach’ adopted by the Welsh 

Government has also been adopted by the 

other agencies and they are actively seeking to 

encourage investment from particular sectors. 

However, given the specific nature of these 

sectors, one agency’s work can often overlap with 

another’s. This duplication of campaigns does not 

reinforce the message as there is little coordination 

to make sure the correct targets are being met. 

There is also the problem of competition between 

agencies. Presently this has created a divide 

between some of them and a result is a lack of 

resource sharing and duplication of enquires. 

Respondents recognise that there is too much 

emphasis put on a limited number of sectors and 

so have suggested that there needs to be more 

done to attract inward investment in general rather 

than just specific targets. At a Cardiff city region 

level, issues around fragmentation particularly in 

terms of marketing might be resolved by closer 

joint project work or through a reconfiguration of 

existing resources.


15 


The evidence in this report indicates 

that there are some significant 

shortcomings in the current structures 

in place in the Cardiff city region to 

attract inward investment. This report’s 

in-depth approach has allowed those 

doing the job today to express their 

thoughts and concerns over the 

present infrastructure. 

It is recommended that there should be greater 

coordination of services. One option would 

be that a single agency link together activities 

where possible, grow synergies where they exist 

and then put in place plans to exploit them. This 

could be done by an existing agency with an 

extended remit. 

One of the most significant issues identified in 

the report is the outside world’s perception of 

Wales’ competitive brand image. In order for 

any investment to come to Cardiff or Wales it 

needs to be seen as an attractive place to be. A 

more proactive marketing campaign designed 

to let global firms know what Wales has to offer, 

both in terms of skills and in terms of location, 

is required. To date the brands of Wales and 

Cardiff have been communicated too weakly, 

with different agencies each trying to focus 

on separate components. This fragments the 

overall message. It is recommended that a single 

coherent brand should be adopted. This need 

not mean dismantling agencies but it would 

encourage them all to fly the same flag. 

Previous approaches by Wales, notably during 

the late ‘90s, had a greater coherence and 

consistency in brand messages. These produced 

a well understood and recognised 'brand' for 

Wales (the WDA brand is still well recognised 

years after it was disbanded) and this helped 

attract large amounts of inward investment. 

It is recommended that a review of the current 

situation takes place and that steps are taken to 

address the issues identified. 

The final recommendation is that in any 

reorganisation within the Welsh Government's 

economic development team there should 

be some provision for the support of inward 

investment from outside the key sectors. 

It became clear from the report that certain 

sectors which do not fit into the Government’s 

key sectors are currently being treated in a 

subsidiary manner. This needs to be addressed 

to both maintain the brand image of Wales and 

to encourage economic development. 

FUTURE RESEARCH 

Attracting inward investment will continue 

to be important in the coming years and, 

with continued global development, more 

competition will exist. It is important that Cardiff 

and Wales have a strong brand recognisable 

across the world. Future research could examine 

the factors which are important in developing a 

strong brand for inward investment.

16 


REFERENCES 

Bellak, C. and Leibrecht, A. (2005) ‘Do 

low corporate income taxes attract 

FDI? Evidence from eight Central and 

Eastern European countries’, University of 

Nottingham Research Paper 2005/43. 

Blomström, M., Kokko, A. and Globerman, S. 

(2000), ‘The determinants of host country 

spillovers from foreign direct investment: a 

review and synthesis of the literature’, in Pain 

(2000). 

Charlton, A. (2003) Incentive Bidding 

for Mobile Investment: Economic 

Consequences and Potential Responses, 

OECD Development Centre Working Paper 

No. 203 (Formerly Technical Paper No. 203) 

Cooke, P. and Morgan, K. (1998) The 

Associational Economy: Firms, Regions and 

Innovation (Oxford University Press, Oxford). 

Hill, S., and Munday, M., (1992) The UK 

Regional Distribution of Foreign Direct 

Investment: Analysis and Determinants, 

Regional Studies, 26 (6): 535-544. 

Pain, N. (2000). (ed.), Inward Investment, 

Technological Change And Growth: The 

Impact Of Multinational Corporations On 

The UK Economy, Palgrave Press. 

Wells, Louis T. and Wint, Jr. Alvin G. (1990) 

Marketing a Country - Promotion as a Tool 

for Attracting Foreign Investment, Foreign 

Investment Advisory Service occasional 

paper No. FIAS 1.


17 

ANNEX 1 - NEW INWARD INVESTMENT, UK AND WALES 

9.2 


3,132 

UK 


UK 

34,077 3,379 36,526 

9.3 

2005-06 

NEW JOBS 

2006-07 

NEW JOBS 

6 

4 

8.3 


UK 

3,743 45,051 

6.2 


UK 

2,185 35,111 

2007-08 

NEW JOBS 

2008-09 

NEW JOBS 

6 

7 

6.4 


UK 

3,431 53,358 

2009-10 

NEW JOBS 

4 

INWARD INVESTMENT - 

NEW JOBS 2005/06 - 2009/10 

SOURCE: UK TRADE & INDUSTRY 

NOTE: (1) ANALYSIS BASED ON SECURED 

PROJECTS, AS PER UKT&I ELIGIBILITY 

CRITERIA 

KEY 


UK 

UK RANKING 

PERCENTAGE

18 


TABLE 1: FOREIGN DIRECT INVESTMENT ACROSS THE UK’S NATIONS AND REGIONS (BY NUMBER OF PROJECTS) 

(*) INCLUDES LONDON SOURCE: ERNST & YOUNG’S EUROPEAN INVESTMENT MONITOR 

SOURCE: UKTI DATA 

REGION 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

TOTAL 

SOUTH EAST (*) 

281 

168 

169 

169 

242 

287 

379 

410 

342 

346 

2,793 

SCOTLAND 

55 

35 

25 

39 

64 

33 

62 

69 

53 

51 

486 

WEST MIDLANDS 

48 

31 

17 

32 

46 

43 

49 

54 

37 

51 

408 

NORTH 

17 

11 

34 

46 

50 

49 

31 

42 

37 

39 

356 

NORTH WEST 

39 

20 

10 

33 

28 

27 

37 

26 

51 

37 

308 


35 

19 

27 

42 

35 

13 

16 

22 

35 

20 

264 

SOUTH WEST 

27 

9 

31 

28 

22 

20 

23 

9 

29 

32 

230 

YORKSHIRE & HUMBER 

27 

23 

15 

25 

24 

17 

14 

16 

22 

42 

225 

EAST ANGLIA 

15 

16 

18 

5 

25 

30 

28 

29 

30 

19 

215 

NORTHERN IRELAND 

20 

21 

13 

10 

16 

18 

17 

26 

19 

25 

185 

EAST MIDLANDS 

10 

17 

10 

24 

11 

22 

29 

10 

31 

16 

180 

TOTAL 

574 

370 

369 

453 

563 

559 

685 

713 

686 

678 3 

5,650 

WALES’S % 

6% 

5% 

7% 

9% 

6% 

2% 

2% 

3% 

5% 

3% 

4.7% 

3 

UKTI recorded data shows total UK investment for 2009-2010 as 1,619. EIM and UKTI have different methodologies for collecting data and Annex D explaines the methodologies employed.


19 

TABLE 2: INWARD INVESTMENT – NEW JOBS OVER THE LAST TEN YEARS 

KEY YEAR NEW JOBS WALES UK PERCENTAGE RANKING AGAINST THE UK'S 12 GEOGRAPHIC AREAS 


6.3% 11.3% 

4,520 

3,872 

2000-01 2001-02 

UK 

71,488 


7 1 

34,087 

UK 


11.8% 15.9% 

4,083 

4,064 

2002-03 2003-04 

UK 

34,396 


3 1 

25,463 

UK 

2004-05 


2,593 

UK 

39,592 

6.5% 

9 

2005-06 


3,132 

UK 

34,077 

9.2% 

6 


9.3% 8.3% 

3,379 

3,743 

2006-07 2007-08 

UK 

36,526 


4 6 

45,051 

UK 


6.2% 6.4% 

2,185 

3,431 

2008-09 2009-10 

UK 

35,111 


7 4 

53,358 

UK

SELLING 

WALES: 

THE ROLE OF AGENCIES 

IN ATTRACTING 


REPORT AUTHORS 

ANDREW CRAWLEY is a Research Fellow at Cardiff 

Business School working with Cardiff Business 

Partnership. He has been involved in publishing 

reports on sector analysis and regional 

economic issues within Wales. His research 

interests lie in industrial economics, spatial and 

regional economic analysis. 

MAX MUNDAY is Director of the Welsh Economy 

Research Unit at the Cardiff Business School and 

Professor of Economics. He has been involved 

in research projects that have examined the 

development of the Cardiff economy and the 

development of key sectors in the city area. 

RICK DELBRIDGE is Associate Dean for Research 

and Professor of Organisational Analysis at 

Cardiff Business School and a Senior Fellow 

of the ESRC/EPSRC Advanced Institute of 

Management Research. His research interests 

include the organisation and management of 

innovation. He is co-author of The Exceptional 

Manager (Oxford University Press). 

ACKNOWLEDGEMENTS 

In preparing this report we 

are very grateful to all those 

who took part in interviews 

and who responded to 

questionnaires. 

CONTACT DETAILS 

Dr. Andrew Crawley 

Tel: +44(0)29 2087 5079 

Email: 

crawleyAJ@cardiff.ac.uk 

Cardiff University 

Aberconway Building 

Colum Drive 

Cardiff 

CF10 3EU 

UK 

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