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5 Trends in Economic Development in 2015

All Out Location

For the final blog of this year, I have decided to highlight five observations of how the world of international economic development is continuously evolving. These are subjective, but highlight how attracting investment and promoting exports is forever a challenging task!

  • Quality of Life: Despite the pictures of beaches and landscapes that frequent many Economic Development Organizations’ (EDOs) websites, common feedback has normally been that an investing company is influenced solely by business-related decisions. Hence a focus on tourism aspects of the offer suggests the EDO may not fully understand the investor process: we should really be talking about other supply factors such as labor, infrastructure, and costs - with quality of life factors near the bottom of the list. This position still holds, but conversations with EDOs and investors this year suggests things are no longer as clear cut. This may be for two reasons: firstly more and more locations have a credible, strong offer in those main supply side factors, such that quality of life might be one of the few differentiators; second, that because investors are increasingly small and innovation driven, senior management will often themselves move to the new location during an expansion phase, and hence they care about how their own quality of life (and their family’s), will be affected.

  • Renewables vs Oil & Gas: While many EDOs have long targeted Renewables as a key sector, the reality has often been that this does not translate into high numbers of investment projects (even if they are of high value), whereas Oil & Gas projects have remained robust. However might the outcome of the COP21 conference this week change that? Its long term, and the deal has seen plenty of criticism, but the fact that there has been truly global participation will surely lead to an upturn in investment promotion opportunities in the sector.

  • Technology: Innovation has for some time been the driving force behind investment. However, only this year has it become so noticeable on a daily basis to me, where almost all client conference calls seem to take place over Skype. While the technology is great, developing country EDOs need to be cautious as there is an inherent risk where internet reliability is variable – potential investors are not always patient!

  • SelectUSA as game changer: I initially suggested this after the first event in 2013. But the 2015 SelectUSA conference, attended by more than 2,500 people, will surely bring FDI and export promotion further into the mainstream for economic developers in the US. The country has long been a leading global source and destination market, so combined with SelectUSA and the increasing international focus of the Washington-based IEDC, opportunities can only increase both for US and non-US EDOs.

  • Alternatives to Large Scale Greenfield (M&A, SMEs): Gone are the days of multiple major greenfield investment projects sustaining an economy. But EDOs across the world have been slow to adapt to that reality. So while focusing on greenfield is still (rightly) the starting point, for some EDOs this is now starting to explicitly include SME attraction, as well as providing services for investment through M&As and joint ventures etc.

So that’s my five observations of FDI and export promotion in 2015, feel free to comment on these or any others you may have observed, and look out for the next blog towards the end of January 2016.

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