The Scottish Executive is to launch a campaign to promote more diverse inward investment. The move is viewed as a response to the fall in Scotland’s traditional form of foreign direct investment – manufacturing.

A new organisation, Scottish Development International (SDI), will be responsible for delivering the new approach, which will mark a shift away from focusing on attracting manufacturing investment.

The global economic slowdown has hit Scotland hard. Telephone company Motorola closed its Bathgate factory in April with the loss of 3100 jobs, while the value of new foreign investment projects has fallen from Ł650m in 1999/2000 to Ł463m for the past financial year.

Wendy Alexander, Scotland’s enterprise minister, said the plans were a response to market conditions that have altered due to globalisation and new competition from countries in continental Europe. “To compete we must engage Scottish companies and institutions with the global economy in new ways,” she said.

The new approach reinforces predictions made in a recent Trade and Development Report released by UNCTAD that investment promotion agencies will have to launch initiatives to attract FDI in the current economic climate. SDI will focus on attracting investment from the technology sector, particularly research and development. Cisco Systems chose Edinburgh as the site for its first European research and development centre, which it wants to become the company’s largest outside the US. It will develop and test networking software for the worldwide market.

The move will require a reorganisation of Scotland’s inward investment division, Locate in Scotland, which was created in 1981 and was a leader in one-stop investment shopping in the UK.

There are 1000 overseas projects based in Scotland. Sectors represented include biotechnology, call centres and R&D.