17 May 2023
Download(685.725 KB)The UK’s creative industries have a global reach. British arts, technology, and design are internationally famous, and attract investment from around the world.
There are many different reasons for foreign investors deciding to choose the UK over creative sectors in other countries. Prestige and reputation are just one factor. Others can include local regulatory systems, tax incentives, access to resources, and the structure of the local labour market.
This paper examines the motivations that underpin foreign direct investment (FDI) in the creative industries. It draws on data from the Orbis Crossborder Investment database, which records information on FDI projects for a range of characteristics, and crucially also captures the underlying motives behind the decision to invest in a specific place and sector.
The paper starts with a brief overview of the literature of FDI in the creative industries, before analysing the data from the Orbis database, and finally outlining some policy recommendations.
The authors identify a range of motivating factors for FDI. They show that motivating factors differ across different creative subsectors, but also among different types of investors. Investors from the US, for example, tend to value a highly skilled workforce. Meanwhile, investors from India are more interested in market-seeking factors, such as the growth of a market or its structure.
This paper drills down into those motivations, examines the way in which FDI changes across the UK’s regions, and looks at ways that institutions and governments can encourage more FDI. It is vital research for policy makers who want to encourage greater international investment into the UK’s creative industries.
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