Abstract: Spreading Knowledge: FDI Attraction Policy in Post-War Scotland

Duncan Ross


In the period after 1945, attraction of Foreign Direct Investment (FDI) was one of the key strategies for the development and diversification of the Scottish economy. This was highly successful, particularly in terms of attracting American manufacturing companies, though there was some European success also. One organization key to the success of the program to attract industrial investment was the Scottish Council (Development and Industry), which was a non-governmental body representing local authorities, industry, trade unions, and other groups committed to the creation of a vibrant and diversified Scottish industrial sector. They undertook extensive programs of visits and marketing on behalf of Scottish industry and were able to provide a clear and focused proposition that moved beyond the more general incentives provided by U.K. government regional policy. The paper focuses in particular on its role in shifting attention away from the United States toward Europe in the early 1970s. This was an attempt to exploit the potential benefits of U.K. membership in the European Economic Community, and it entailed coordination of the many visits from local authorities and regional development authorities that German industrialists, in particular, had begun to find tiresome. The paper concludes by noting that, though there have been significant employment and industrial benefits from this long-term policy of FDI attraction, the extent to which the Scottish industrial economy has been transformed is open to debate. Scotland therefore serves as a valuable laboratory in which to explore many of the issues around the benefits of FDI in developing countries.