Last week, the Welsh Government launched its first ever international strategy for the nation.
Its ambitions are to raise Wales’ profile internationally by building on its reputation as a place buzzing with creativity where people are free to innovate and experiment; grow the economy by increasing exports and attracting inward investment; and establishing Wales as a globally responsible nation.
To achieve this, the Welsh Government have set out a number of priorities, all of which will add value to the economy going forward. This will help raise the nation’s profile through a variety of interventions including increasing Wales’ presence with Europe, working more closely with the Welsh global diaspora and empowering key Welsh organisations to enter difficult markets.
To become globally responsible, it will become the first country to put the UN sustainability goals into law by promoting the Well-being of Future Generations Act, become known as a world-leading nation for recycling and establish its growing reputation for sustainable adventure tourism.
In terms of the Welsh economy, the strategy has a target of growing the contribution of exports by five per cent and promoting so-called “magnet” projects which will direct investment to specific parts of Wales. It will also ensure that Wales is recognised internationally in three distinct and growing sectors in which Wales has expertise, experience and ambition namely cyber security, compound-semiconductors and film and television production.
Finally, it will take full advantage of the innovation and entrepreneurship within the our university sector by making sure Wales is recognised for the impact of its research excellence and for being the best place in the UK for the number of graduate start-ups.
If done properly, the ambitious approach within this strategy will certainly pay dividends not only for the Welsh economy but for the profile of the nation on an international. However, as with all good strategies, it does raise more questions than it answers.
First of all, there is the laudable aim of growing the contribution that exports make to the Welsh economy by 5%. That would mean, on current data, an increase of around £900 million in exports although there is no time period designated for this to happen.
Clearly, that could be an achievable target but as the majority of exports from Wales derive from large businesses such as Airbus and Tata, it may be difficult for Welsh Government to directly influence the strategies of these multinational companies and they amount they sell overseas. The closure of Ford in Bridgend at the end of this year will also not help that target.
Whilst the focus on new key emerging sectors is to be welcomed, it is somewhat surprising that there is little emphasis on manufacturing within the document, given that is where much of exporting activity in Wales is currently derived.
More relevantly, Wales now has the most manufacturing intensive economy in the UK having grown from 15.4% in 2009 to 16.9% in 2018. Manufacturing has also made a greater contribution to the growth of the economy since the recession than for any other part of the UK and nearly 40 per cent of the largest firms in Wales are based within this sector. Given that the Welsh Government has promised a manufacturing strategy for the economy soon, there may be a greater focus on how more export support can be provided to the industry going forward.
More importantly, if the target of increasing the contribution of exporting to the economy is to be reached, then it is not only large firms that need to export. Currently, it is estimated that only one in ten of small to medium sized enterprises (SMEs) are involved in exporting activities and yet there is no mention in the strategy of how the Welsh Government will support smaller firms to improve their internationalisation activities. Certainly, a target of increasing the number of Welsh exporters in the SME sector would be more relevant than the earlier 5% growth target and focus the minds of those running business support in Wales towards this strategy.
Finally, and perhaps most controversially perhaps, the three sectors highlighted within the document are all largely focused in South East Wales.
Given the increasing sensitivities over the impact of the Welsh Government in other parts of Wales, there may need to be a review to see whether other areas - such as high value manufacturing in North East Wales or food and drink in West Wales - need to also to be categorised as priority export sectors. I am sure they are for the Welsh Government but the messaging needs to be clearer.
Therefore, after twenty years of devolution this international strategy is a long overdue step in the right direction by the Welsh Government to ensure Wales, despite being a small nation, makes its mark within a global economy over the next few years. Hopefully, the private sector will buy into the vision wholeheartedly and ensure that we look increasingly outwards as a nation to grow our economy.