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Indirect Employment Effects of Foreign Direct Investment into the UK

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  • Driffield, Nigel

Abstract

This paper examines some of the employment consequences, broadly defined, associated with foreign inward investment. A foreign firm entering an industry in the UK will have a degree of firm-specific advantage over the incumbent firms. This advantage is assumed to manifest itself in terms of a productivity differential over the domestic sector. As such, foreign entry will create factor market disequilibrium in the domestic sector. It is shown that such investment generates 'employment substitution' away from UK firms, equivalent to approximately one-fifth of all the jobs created by inward investment. Copyright 1999 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Suggested Citation

  • Driffield, Nigel, 1999. "Indirect Employment Effects of Foreign Direct Investment into the UK," Bulletin of Economic Research, Wiley Blackwell, vol. 51(3), pages 207-221, July.
  • Handle: RePEc:bla:buecrs:v:51:y:1999:i:3:p:207-21
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    Cited by:

    1. Taylor, Karl & Driffield, Nigel, 2005. "Wage inequality and the role of multinationals: evidence from UK panel data," Labour Economics, Elsevier, vol. 12(2), pages 223-249, April.
    2. Sourafel Girma & David Greenaway & Katharine Wakelin, 2013. "Who Benefits from Foreign Direct Investment in the UK?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(5), pages 560-574, November.
    3. Fortanier, Fabienne & van Wijk, Jeroen, 2010. "Sustainable tourism industry development in sub-Saharan Africa: Consequences of foreign hotels for local employment," International Business Review, Elsevier, vol. 19(2), pages 191-205, April.
    4. Laura Resmini, 2003. "Economic integration and regional patterns of industry location in transition countries," ERSA conference papers ersa03p399, European Regional Science Association.
    5. Florence Eid, 2003. "Foreign Direct Investment in The Arab World: Creating The Missing Link," Working Papers 0309, Economic Research Forum, revised 03 2003.
    6. Resmini, Laura, 2004. "Economic integration and industry location in transition countries," ZEI Working Papers B 10-2004, University of Bonn, ZEI - Center for European Integration Studies.
    7. Williams, David, 2003. "Explaining employment changes in foreign manufacturing investment in the UK," International Business Review, Elsevier, vol. 12(4), pages 479-497, August.
    8. Fabienne Fortanier & Selwyn Moons, 2011. "Foreign Investors in The Netherlands: Heterogeneous Employment and Productivity Effects," De Economist, Springer, vol. 159(4), pages 511-531, December.

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