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Productivity and foreign ownership in the UK car industry

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  • Rachel Griffith

    ()
    (Institute for Fiscal Studies and University of Manchester)

Abstract

Many sectors of the UK economy experienced rapid productivity growth over the 1980's. This coincided with an increase in the flow of inward investment. Studies using macro data have linked these two events. This paper investigates what has happened in one industry at the microeconomic level and asks whether foreign-owned establishments in the UK car industry more productive than domestic-owned ones. Production functions are estimated using a new panel data set at the plant level. The findings suggest that, while foreign-owned establishments have higher output and value-added per worker, these differences appear to be largely explained by different levels of factor usage. Foreign-owned firms invest more in physical capital and use more intermediate goods. They also pay their workers higher wages. Differences in levels of total factor productivity still exist but they are relatively small.

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Bibliographic Info

Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W99/11.

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Length: 38 pp.
Date of creation: Apr 1999
Date of revision:
Handle: RePEc:ifs:ifsewp:99/11

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Cited by:
  1. Dirk Willem Te Velde, 2002. "Foreign Ownership and Wages in British Establishments," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 101-108.
  2. Christian Bellak, 2004. "How Domestic and Foreign Firms Differ and Why Does it Matter?," Journal of Economic Surveys, Wiley Blackwell, vol. 18(4), pages 483-514, 09.
  3. Behera, Smruti Ranjan Behera & Dua, Pami Dua & Goldar, Bishwanath Goldar, 2012. "Horizontal and Vertical Technology Spillover of Foreign Direct Investment: An Evaluation across Indian Manufacturing Industries," MPRA Paper 43293, University Library of Munich, Germany.
  4. Luigi Benfratello & Alessandro Sembenelli, 2002. "Foreign Ownership and Productivity: is the Direction of Causality so Obvious?," Development Working Papers 166, Centro Studi Luca d\'Agliano, University of Milano.
  5. David Greenaway & Alessandra Guariglia & Zhihong Yu, . "The More the Better? Foreign Ownership and Corporate Performance in China," Discussion Papers 09/05, University of Nottingham, GEP.
  6. Añón Higón, Dolores & Manjón Antolín, Miguel, 2012. "Multinationality, foreignness and institutional distance in the relation between R&D and productivity," Research Policy, Elsevier, vol. 41(3), pages 592-601.
  7. Ali-Yrkkö, Jyrki & Ylä-Anttila, Pekka, 2001. "Globalisation of Business in a Small Country - Does Ownership Matter?," Discussion Papers 779, The Research Institute of the Finnish Economy.
  8. Christian Bellak, 2001. "Multinational Enterprises and Their Domestic Counterparts: Past Research, Current Issues and Future Directions," Working Papers geewp18, Vienna University of Economics Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
  9. Frank Barry & Adele Bergin, 2010. "Ireland’s Inward FDI over the Recession and Beyond," The Institute for International Integration Studies Discussion Paper Series iiisdp321, IIIS.

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