How foreign ownership drains Scotland’s wealth
The Scottish Government has, as a conscious political choice, made an effort to maximise ‘foreign direct investment’ or ‘inwards investment’ as a tool for growing the Scottish economy. However, years and decades of rounds of these kinds of investments have exposed Scotland to the worst aspects of the globalised economy. Large amounts of public money is funnelled towards companies in the form of subsidies or tax breaks only to see those companies pack up and leave the moment the subsidies end or someone else gives them a ‘better’ deal. Even the ‘success’ stories of the Scottish economy, such as our agricultural and energy exports, are largely owned by multinational companies based outwith Scotland who extract profits from those investments.
This paper examines data published by the Scottish Government on Scotland’s Gross Domestic Product (GDP) and Gross National Income (GNI) which lays out the extent to which the profits from foreign-owned companies in Scotland are extracted outwith Scotland, how it is done and where the profits go.
For the first time, this paper also compares the level of net economic flow (inwards or outwards) to other countries to find that Scotland is one of only a few countries with our level of economic development that sees such high levels of profit extraction.