SDI policy evaluation: final report

Scottish Development International (SDI) is the Government’s international economic development arm. It is a joint venture between the Scottish Government (SG), Scottish Enterprise (SE) and Highlands and Islands Enterprise (HIE), providing services to support inward investment and internationalisation for the whole of Scotland. SDI’s main objectives are to enable Scottish companies to increase their internationalisation either through increasing export sales or other international activities (e.g. joint ventures or overseas acquisitions), and to encourage overseas-based companies to set up and expand within Scotland. The evaluation aimed to assess the impact of SDI activities, focusing on the international activities of Scottish-based businesses, and investment in Scotland by foreign-owned companies.

The study involved interviews with 305 companies that had benefited from inward investment or internationalisation support; econometric analysis of inward investment and internationalisation activities carried out by Professor Richard Harris (University of Glasgow); case studies of supported businesses; and consultations with SE, SDI, HIE, SG and external partner organisations.

The findings of the evaluation are generally very positive and consistent across the strands of analysis. Businesses report improvement in relation to internationalisation capabilities and performance, and inward investing companies report influence on their decisions to invest in Scotland and to remain here. Econometric results show that with regard to internationalisation, SDI assistance has a strong and significant impact, with assisted plants nearly 19% more productive than matched cases with no assistance. For inward investment, average labour productivity, wages and levels of employment are higher among SDI assisted businesses than among other firms in Scotland. Findings from the survey suggest that for every £1 spent by SDI on attracting inward investment to Scotland, a further £11 is generated for the Scottish economy, while internationalisation activity generates an additional £7 for every £1 invested by SDI. Operationally, there have also been positive developments in recent years, including a more explicit strategic background driven by the Industry Demand Statements, more joined-up activity between the inward and outward-facing work of SDI and more effective joint working both internally and externally.

A number of recommendations are made for consideration with regard to further improving SDI’s performance. For example, internationalisation should have a higher profile generally and there should be greater emphasis on developing the international capability among Scottish firms. SDI should also consider expanding its activities to support preparatory or strategic work with companies. For inward investment, additional analysis and learning from past investments would help shape future activity.