Foreign Investment Drives and Targets in the British Creative Sector
In a new discussion paper, researchers from Newcastle University Business School, Dr. Jonathan Jones and Dr. Sara Maioli, delve into the key motivators for foreign direct investment (FDI) in the UK's creative industries. The paper, which is one of the first studies to examine the impact of Brexit on this sector, provides valuable insights for policy makers aiming to attract more international investment.
The research outlines that the UK's stable industrial strategy, investment in skills and infrastructure, intellectual property (IP) protections, and market access with a strategic approach to overcoming market failures are primary motivators for FDI in creative industries. Investors are drawn to policy stability and supportive industrial policies that foster growth and productivity, especially when public and private investments work together to reduce risk and improve returns.
However, the motivating factors for FDI differ among investors from different countries. For instance, US and Chinese investors are often motivated by complementary public investments and subsidies, such as in technology and innovation infrastructure. These investors seek sectors where government support, like IP subsidies or infrastructure improvements, boost the effectiveness and attractiveness of their investments.
Investors from developed markets, such as the US, value a highly skilled workforce, while those from India are more interested in market-seeking factors. On the other hand, Chinese investors emphasize government-backed incentives and infrastructure complementarity. European investors may weigh regulatory alignment and access to the UK’s creative clusters as significant factors.
The paper also highlights the role of cooperatives as a creative industry business model and discusses ways institutions and governments can encourage more FDI in the UK's creative industries. Notably, the UK's creative industries have a global reach, with British arts, technology, and design being internationally recognized. In 2020, the Fashion and Textiles industry alone contributed nearly £20 billion to the UK economy.
The discussion paper utilises data from the Orbis Crossborder Investment database to analyse the motivations for FDI. The report underscores the importance of sustainability in policy recommendations for attracting FDI, with a focus on fostering a supportive environment for creative industries that encourages innovation, growth, and long-term success.
- The paper from Newcastle University Business School suggests that sustainability, innovation, and long-term success are crucial factors for attracting foreign direct investment (FDI) in the UK's creative industries.
- According to the researchers, US and Chinese investors are primarily motivated by complementary public investments in technology and innovation infrastructure, alongside IP protections and market access.
- The UK's creative clusters and regulatory alignment with the EU are significant factors for European investors, while a highly skilled workforce and market-seeking factors attract investors from developed markets such as the US.
- Chinese investors prioritize government-backed incentives and infrastructure complementarity when considering FDI opportunities in the UK's creative industries.
- Institutions and governments can encourage more FDI in the creative industries by promoting the role of cooperatives as a business model.
- The integration of data from the Orbis Crossborder Investment database into the discussion paper provides valuable insights into the motivations for FDI in the UK's creative industries, underscoring the importance of education-and-self-development, policy stability, and supportive industrial policies.
