Committee publication · Correspondence · 19 June 2025
Correspondence from Professor Riccardo Crescenzi to the Chair dated 13 June 2025 relating to the evidence session on 26 March as part of the inquiry into Promoting Wales for Inward Investment
From: Welsh Affairs Committee
Summary
Professor Riccardo Crescenzi of the London School of Economics provides written evidence to the Welsh Affairs Committee following his March 2025 oral testimony on inward investment promotion. He addresses four Committee questions: AI's role in monitoring FDI, the strategic value of a national brand, updated FDI trends for Wales and Scotland, and recommendations for strengthening Wales's investment attraction capacity. He emphasises the need for a dedicated regional investment promotion agency and highlights Wales's 'lost decade' of FDI (2010–2019) and current concentration in lower-value manufacturing sectors.
Key findings
- AI and large language models can enhance FDI monitoring by analysing structured investment data alongside unstructured sources (news, company reports) to identify foreign investment aligned with strategic goals like digitalisation and decarbonisation.
- Brand Wales must be strategically grounded in authentic economic assets and supported by a visible, well-resourced investment promotion agency operating as both first point of contact and 'ecosystem builder'—mirroring Scotland's Scottish Development International model.
- Wales experienced a 'lost decade' (2010–2019) during which pre-crisis FDI levels were not restored; post-pandemic recovery is tentative and dominated by renewable energy and fossil fuel sectors.
- FDI into Wales remains concentrated in lower-value-added activities (assembly, production) rather than high-value functions (R&D, innovation, headquarters), contrasting unfavourably with Scotland.
- Research evidence shows regional investment promotion agencies in less developed regions can increase probability of attracting foreign capital by 14%, raise total inflows by 71%, and double job creation (102%) annually.
Tone
FactualTopics
Key actors
Professor Riccardo Crescenzi, Ruth Jones MP, London School of Economics, UK Research and Innovation (UKRI), Department for Business and Trade, Scottish Development International, Welsh Affairs Committee
Notable line
“IPAs in less developed regions can, on average increase the probability of attracting foreign capital by up to 14%, raise total investment inflows by 71%, and double the number of jobs created (by 102%) annually.”
Key Quotes
“Recent research at the London School of Economics, supported by UK Research and Innovation (UKRI), has demonstrated the potential of artificial intelligence (AI) and large language models (LLMs) to improve the monitoring and analysis of inward investment.”
“A strong national brand can play a valuable role in promoting inward investment, but its effectiveness depends on two critical conditions: strategic alignment with the nation's value proposition, and institutional capacity to deliver on the promises that the brand implies.”
“… the period from 2010 to 2019 can be characterised as a "lost decade" for inward FDI into Wales.”
“… inward FDI into Wales remains disproportionately concentrated in lower value-added activities, such as assembly and production.”
“… investment promotion works. IPAs are proven to be effective, particularly when designed to operate at the sub-national level.”
Source · parliament.uk record ↗