Chapter

Characteristics of Foreign-Owned Firms in British Manufacturing

Edited by Rachel Griffith and Helen Simpson

in Seeking a Premier Economy

Published by University of Chicago Press

Published in print July 2004 | ISBN: 9780226092843
Published online February 2013 | e-ISBN: 9780226092904 | DOI: http://dx.doi.org/10.7208/chicago/9780226092904.003.0005
Characteristics of Foreign-Owned Firms in British Manufacturing

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The 1970s and 1980s saw an increase in the international openness of the British economy. This opening up of the British economy was expected to bring increased growth through a number of routes, one of which was through making the United Kingdom a more attractive location for internationally mobile investment. Foreign direct investment both into and out of the United Kingdom rose over the 1980s but fell off in the early 1990s, before recovering (strongly) in the middle to late 1990s. Like a number of other countries, the United Kingdom uses fiscal policy to attract multinational corporations (MNCs) and hence potentially capitalize on technological spillovers. In the 1980s, Regional Selective Assistance grants replaced Regional Development Grants as the main form of inducement. This chapter examines the characteristics of MNCs in the British manufacturing sector. It first considers real economic activity by looking at subsidiaries of MNCs and then considers differences in labor productivity and factor usage between foreign-owned and domestic-owned firms using establishment-level data.

Keywords: multinational corporations; foreign direct investment; United Kingdom; labor productivity; subsidiaries; manufacturing; fiscal policy; Regional Selective Assistance grants

Chapter.  11268 words.  Illustrated.

Subjects: International Economics

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