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Technical Note for PSA 11

URN No: 02/1613/A11

PSA Target 11. Deliver a measurable improvement in the business performance of UK Trade & Investment's customers; and maintain the UK as the prime location in the European Union (EU) for foreign direct investment. Joint target with FCO

This PSA target covers the work of  UK Trade and Investment (formerly British Trade International), which brings together the work of the FCO and DTI on international trade and investment.  The two elements of the PSA target are measured separately.

Deliver a measurable improvement in the business performance of UK Trade & Investment customers

Success Criteria

This element of the PSA target will be measured using three sub-targets:

At least *30% of new-to-export firms assisted by UK Trade & Investment improve their business performance within 2 years

At least *50% of established exporters assisted by UK Trade & Investment improve their business performance within 2 years

At least 70% of firms receiving assistance to win major projects overseas report that UK Trade & Investment’s help was a major factor
Data and Timing

Data to assess UK Trade & Investment’s performance against these sub-targets is gathered from a number of surveys conducted by outside consultants.

Reading Business Group have been appointed to measure the first two sub-targets by carrying out a survey of 800 firms each year (600 during 2002) to gather information on the overall performance of UK Trade & Investment.  This service has been piloted and a full survey is being undertaken through autumn 2002.   Thereafter it is intended to be repeated as an annual exercise.  The survey is based on telephone interviews of a stratified sample of users of UK Trade & Investment’s principal services.  Two thirds of the interviews will be with firms who have recently used UK Trade & Investment services (in the past 6-12 months) for an initial assessment of their impact; the remaining third will be follow-up interviews with firms 18-24 months after they used a service (so the first survey covers firms who have been assisted by UK Trade & Investment’s services in 2001-2002; the 2003 survey will interview firms who have received assistance in 2002-03 and follow-up interviews with firms who received assistance in 2001-02).

The survey concentrates on gathering information on business performance and process.  This information will indicate how UK Trade & Investment’s assistance has improved firm performance, especially productivity and profitability, from which it is intended to be able to judge whether UK Trade & Investment has met its PSA sub-targets.

The questions in the interviews contain sufficient crosschecks, including data about actual performance, to enable Reading to identify inconsistent responses.  The follow-up interviews will provide a further check on the accuracy of firms’ initial responses.

This system of measurement is relatively new, reflecting the change in objective to improving business performance.  The result s of the 2002 survey have been used as the baseline for the current PSA targets for new-to-export and established exporters.  These should prove challenging targets, especially for new-to-export firms, which combines both entirely new exporters and inexperienced exporters.  The expansion of the survey in 2003 is expected to lead to the conclusion of more totally new exporterswhich, in the 2002 survey, showed significantly fewer signs of improvement to their performance compared with the inexperienced exporters.  As more evidence is built up of the performance of schemes, targets will be adjusted to ensure they continue to prove and challenge.

In addition consultants Casson & Crispe have been appointed to assess UK Trade & Investment’s third sub-target, the impact on firms winning large projects overseas.  This is being measured on the basis of an annual survey of firms involved in major projects.  50 interviews were undertaken in January 2002, with 60 planned for 2003.  The survey questions firms about assistance on projects over the preceding year, i.e. the 2003 survey will cover 2001-02.    

A structured questionnaire is used, which focuses on whether UK Trade & Investment assistance has significantly helped move firms from one basic stage to another in the process of winning work on a major project within the past year.  The three basic stages are development of project, formal bidding and award/implementation.  To validate the results firms are also asked about their overall judgement on the importance of government assistance to their projects success and about progress on non-assisted projects. Their responses will be checked for consistency.

Maintaining the UK as the prime location in the European Union (EU) for foreign direct investment (FDI)

Success Criteria, Data and Timing

To date this element of the PSA target has been measured by trends in the stock of foreign direct investment (FDI) in each three-year period as recorded in the United Nations’ Conference on Trade and Development (UNCTADs) World Investment Report (an annual publication) to be more positive than that of our EU competitors.

It is proposed in future to measure “the UK's share of the stock of EU foreign direct investment (FDI) on a year by year basis, as recorded in the United Nations’ Conference on Trade and Development (UNCTAD) World Investment Report (an annual publication)” in order to determine whether the UK is the prime location for FDI, rather than using trends.  This would eliminate the “catch up” problem – as other countries “catch up” with the UK any increase in their stocks from a lower base is very likely to be larger in percentage terms.