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The impact of foreign direct investment on UK manufacturing: is there a profit squeeze in domestic firms?

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  • Nigel Driffield
  • Max Munday

Abstract

This paper examines the extent to which foreign direct investment (FDI) in selected UK manufacturing sectors has an impact on reported profits in domestic firms. Foreign manufacturing firms are characterized by relatively high labour productivity and low wage shares. Entry by foreign firms not only impacts on domestic market shares, but also on domestic cost conditions. As a result, profitability in the indigenous sector may be reduced. There are a number of policy implications of this analysis which are explored.

Suggested Citation

  • Nigel Driffield & Max Munday, 1998. "The impact of foreign direct investment on UK manufacturing: is there a profit squeeze in domestic firms?," Applied Economics, Taylor & Francis Journals, vol. 30(5), pages 705-709.
  • Handle: RePEc:taf:applec:v:30:y:1998:i:5:p:705-709 DOI: 10.1080/000368498325697
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    Cited by:

    1. Miao Wang, 2010. "Foreign direct investment and domestic investment in the host country: evidence from panel study," Applied Economics, Taylor & Francis Journals, vol. 42(29), pages 3711-3721.
    2. Nigel Driffield, 2001. "Inward investment, industry concentration and the speed of adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(2), pages 193-214, June.
    3. Christian Bellak, 2001. "Multinational Enterprises and Their Domestic Counterparts: Past Research, Current Issues and Future Directions," Working Papers geewp18, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    4. Natália Barbosa & Helen Louri, 2005. "Corporate Performance: Does Ownership Matter? A Comparison of Foreign- and Domestic-Owned Firms in Greece and Portugal," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(1), pages 73-102, August.
    5. 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, September.
    6. Chan Sok GEE & Mohd Zaini Abd KARIM, 2011. "Fdi´S Country Of Origin And Output Growth: The Case Of Malaysia?S Manufacturing Sector, 1991-2006," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 11(1).
    7. repec:kap:jinten:v:15:y:2017:i:4:d:10.1007_s10843-017-0205-4 is not listed on IDEAS
    8. Mico APOSTOLOV, 2016. "Ownership And Control Structures A Case Study," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 8(2), pages 23-37, June.
    9. Nigel Driffield, 2001. "Inward Investment and Host Country Market Structure: The Case of the U.K," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(4), pages 363-378, June.
    10. Ergun Dogan & Koi Nyen Wong & Michael Meow-Chung Yap, 2010. "Turnover, Ownership and Productivity in Malaysian Manufacturing," Monash Economics Working Papers 13-10, Monash University, Department of Economics.

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