New research by the Institute for International Cultural Relations at the University of Edinburgh has found that promoting a nation’s culture and political ideals on the global stage brings significant economic and strategic advantages. 

Soft power’s impact on FDI, visitor numbers, and influence

In a world first, researchers have found that a state’s soft power has statistically significant impact on foreign direct investment (FDI), overseas student recruitment, tourism, and international influence in fora like the UN General Assembly. 

The new research was conducted for the British Council by the Institute for International Cultural Relations at the University of Edinburgh. It used available data from 2000 to 2012. Experts assessed how various forms of soft power – including cultural institutions, prosperity and internet connectivity, democracy and foreign aid, and overall cultural ranking – influenced a country’s international pull. 

A 1% increase in the number of countries a cultural institution from country X covers results in almost 0.66% increase in FDI for that country

Cultural institutions, like the British Council and Goethe-Instuit, were found to be influential for attracting international students, international tourists, and FDI. The more countries that host a cultural institute, the better the return for the parent state. For example, a 1% increase in the number of countries a cultural institution from country X covers results in almost 0.66 percent increase in FDI for that country. In 2016 such a rise would have been worth £1.3bn for the UK, which recorded £197bn of foreign investment. It also prompts a 0.73% increase in international students for its country of origin. Using the latest UK figures from 2015/16, this equates to almost 3,200 additional international students.  

Higher levels of individual prosperity, measured in GDP per capita and the percentage of a population connected on the Internet, were also found to lead to higher numbers of international students and tourists, FDI, and global political influence. Researchers found that a prosperous population is attractive to prospective students from overseas. For every one % increase in per capita income, international student numbers increased by between 0.35 and 0.98%. Students are particularly drawn to countries with high internet connectivity. Every 1% increase in Internet users from country X is associated with a 0.5% increase in the number of international students for that country.

Political pluralism, high levels of democracy and few restrictions on political rights are other important factors attracting international students, tourists and FDI. As political rights become restricted, student numbers decline, the research found. Looking more closely at the data, political rights restrictions in a country matter more for explaining global political influences than overall levels of democracy. Foreign aid has a positive influence on the influx of students, tourists, FDI and political influence, as measured by a country’s ability to affect voting patterns at the United Nations. 

A country’s cultural ranking in the world also matters for attracting FDI and for political influence in the world. The impact of a high culture rank is higher than any of the factors in the models presented for voting in the UN General Assembly – including the hard power of a state’s economic strength as measured in GDP

Finally, a country’s cultural ranking in the world also matters for attracting FDI and for political influence in the world. The impact of a high culture rank is higher than any of the other factors in the models presented for voting in the UN General Assembly – including the hard power of a state’s economic strength as measured in GDP.