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Who Benefits from Foreign Direct Investment in the UK?

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  • Girma, Sourafel
  • Greenaway, David
  • Wakelin, Katharine

Abstract

The presumed higher productivity of foreign firms and resulting spillovers to domestic firms has led governments to offer financial incentives to foreign firms. We investigate if there is any productivity or wage gap between foreign and domestic firms in the UK and if the presence of foreign firms in a sector raises the productivity of domestic firms. Our results indicate that foreign firms do have higher productivity than domestic firms and they pay higher wages. We find no aggregate evidence of intra-industry spillovers. However, firms with low productivity relative to the sector average, in low-skill low foreign competition sectors gain less from foreign firms. Copyright 2001 by Scottish Economic Society.

Suggested Citation

  • Girma, Sourafel & Greenaway, David & Wakelin, Katharine, 2001. "Who Benefits from Foreign Direct Investment in the UK?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(2), pages 119-133, May.
  • Handle: RePEc:bla:scotjp:v:48:y:2001:i:2:p:119-33
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    References listed on IDEAS

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    1. Greenaway, David & Hine, Robert C. & Wright, Peter, 1999. "An empirical assessment of the impact of trade on employment in the United Kingdom," European Journal of Political Economy, Elsevier, vol. 15(3), pages 485-500, September.
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