Does Economic Investment Spread Evenly?

It seems to be instinctive, when we see a symptom of something apparently going wrong, to suggest a cure rather than to try first to diagnose what the problem actually is. Is an example of this the regular occurrence in our economic affairs of questions about why some council areas do not get an equal share of the jobs promoted by our official agencies?  ask Prof Simon Bridge.

In a recent instance comments were raised about “Invest NI’s allocation of foreign direct investment (FDI) visits” and why such visits appear to be predominately focussed on Belfast – but, even before Invest NI was created, both IDB and LEDU were often asked similar questions about their efforts to encourage job creation.

The statistics about inward investment visits are available, probably because they are requested, but are they actually helpful? Is this a case where the availability of data on the location of jobs, or even of visits by prospective investors, suggests that this is somehow a significant indicator of the problem? Clearly it is part of Invest NI’s remit try to bring inward investment prospects to Northern Ireland – but can it then really share their interest evenly across all areas? Talking about Invest NI’s “allocation of visits” suggest that Invest NI has a stock of such visits which it can allocate as it sees fit – but surely those inward investment projects will wish to locate in places that best suit them.

Is it therefore reasonable to consider what would attract business to locate in Northern Ireland and then, if they are considering a presence here, what requirements will influence their choice of location? Might their key concerns include things like access to markets in the UK and/or EU and a place where they could find the staff they will want to hire?

If access to markets is a consideration, where are best transport links to those markets and, if an attraction of Northern Ireland is the potential to hire good employees, where are they likely to be found? It was over 20 years ago that we first heard of Richard Florida and his observation that young bright workers (what he called the creative classes) look for jobs in or near the places where they want to live. Therefore just creating jobs for them and offering them wages is not enough if the location itself does not appeal to them. Instead it is necessary to set up near where they want to be. Is it therefore understandable that inward investment projects will want to set up in or near Belfast – with its relatively attractive social environment and easy access to the main ports and airports.

Surely Invest NI’s prime concern is to get good business prospects to Northern Ireland and for that it has to try to make the best case and not waste time showing them places that are unlikely to fit their requirements? Is trying to get FDI into the apparently less favoured parts of Northern Ireland a bit like other forms of ‘levelling up’ in that the problem needs to be understood before a remedy can be suggested?

Who decides where FDIs will set up: Invest NI or the FDIs themselves? If the underlying factor is that all areas do not have the same level of attractiveness for FDI prospects, then just asking Invest NI to send more visits to less appealing areas will not work. Also, if all areas do not have the same level of potential to generate local business growth, then allocating more ‘levelling up’ grants for infrastructure projects there will also be unproductive.

Politicians may be tempted to try to advocate for the constituencies they represent by highlighting symptoms of their problems and demanding supposedly easy solutions. But, unfortunately, if the problem is due to factors such as those suggested above, then rectifying them will require a long term strategy not a quick fix. Some people may not like that suggestion – but that does not mean that it isn’t so!

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