Inward Investment and Technical Progress in the United Kingdom Manufacturing Sector
This paper investigates the impact of direct investment by foreign-owned companies on technical progress and hence labour productivity in the UK manufacturing sector. Using an industry-level panel data set we find that foreign-owned firms have a significant positive effect on the level of technical efficiency in domestic firms. There is evidence of significant intra-industry and inter-industry spillovers from inward investment. These findings remain robust even when other factors such as imports and domestic R&D expenditures are allowed for. Inward investment appears to be a much more important source of technical progress than foreign trade. Copyright 2001 by Scottish Economic Society.
Volume (Year): 48 (2001)
Issue (Month): 2 (May)
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