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Re-Investment and the Survival of Foreign-Owned Plants

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Author Info
Jonathan Jones
Colin Wren
Abstract

Foreign-owned plants have higher conditional exit rates, but this paper tests the hypothesis that re-investment "embeds" these plants, leading to significantly longer survival time durations. A unique dataset is used for 265 plants that commenced in foreign ownership after 1985 in North East England, distinguishing between start-up ("greenfield") and acquisition plants. Survival is measured at 2000, and the paper analyses the duration to the first reinvestment and survival, allowing for selection into the multiple investment state. It finds that re-investment increases the lifetime of start-up plants, but this is insignificant once selection is controlled for, while for acquisition plants there is no difference. Grants affect selection, but not the survival of start-up plants. The paper offers little support for re-investment as a source of "embeddedness".

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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0003.

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Date of creation: Aug 2008
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Handle: RePEc:cep:sercdp:0003

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Related research
Keywords: FDI; re-investment; plant survival; exit; duration analysis; grants;

Find related papers by JEL classification:
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
R58 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - Regional Development Policy

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