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Characteristics of Foreign-Owned Firms in British Manufacturing

In: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000

  • Rachel Griffith
  • Helen Simpson

This paper describes the characteristics of manufacturing establishments in Britain over the period 1980 to 1996, paying particular attention to differences between establishments of different ownership nationalities. The findings suggest that establishments that are always foreign-owned have significantly higher labour productivity than those that remain under domestic ownership. In addition, labour productivity improves faster over time and faster with age in foreign-owned establishments. The difference in labour productivity is matched by an equivalent difference in levels of investment per employee. Establishments that change ownership nationality do not seem to experience very large changes in labour productivity levels. The proportion of skilled workers in the workplace, and wages for both skilled and operative workers are higher in foreign-owned establishments than domestic-owned, in line with differences in labour productivity.

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This chapter was published in:
  • David Card & Richard Blundell & Richard B. Freeman, 2004. "Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000," NBER Books, National Bureau of Economic Research, Inc, number card04-1, May.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 6747.
    Handle: RePEc:nbr:nberch:6747
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    1. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-38, December.
    2. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-46, August.
    3. Layard, R. & Nickell, S., 1989. "The Thatcher Miracle?," Papers 343, London School of Economics - Centre for Labour Economics.
    4. Sebastian Edwards, 1997. "Openness, Productivity and Growth: What Do We Really Know?," NBER Working Papers 5978, National Bureau of Economic Research, Inc.
    5. Gavin Cameron & James Proudman & Stephen Redding, 1999. "Openness and its association with productivity growth in UK manufacturing industry," Bank of England working papers 104, Bank of England.
    6. Wilfred J. Ethier & James R. Markusen, 1991. "Multinational Firms, Technology Diffusion and Trade," NBER Working Papers 3825, National Bureau of Economic Research, Inc.
    7. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    8. Anthony Venables, 1994. "Trade Policy under Imperfect Competition: A Numerical Assessment," NBER Chapters, in: Empirical Studies of Strategic Trade Policy, pages 41-66 National Bureau of Economic Research, Inc.
    9. Steven Globerman, 1979. "Foreign Direct Investment and `Spillover' Efficiency Benefits in Canadian Manufacturing Industries," Canadian Journal of Economics, Canadian Economics Association, vol. 12(1), pages 42-56, February.
    10. Alan J. Auerbach & Kevin Hassett, 1991. "Taxation and Foreign Direct Investment in the United States: A Reconsideration of the Evidence," NBER Working Papers 3895, National Bureau of Economic Research, Inc.
    11. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
    12. Mark E. Doms & J . Bradford Jensen, 1998. "Comparing Wages, Skills, and Productivity between Domestically and Foreign-Owned Manufacturing Establishments in the United States," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 235-258 National Bureau of Economic Research, Inc.
    13. Robert E. Hall, 1986. "The Relation Between Price and Marginal Cost in U.S. Industry," NBER Working Papers 1785, National Bureau of Economic Research, Inc.
    14. Alasdair Smith, 1994. "Strategic Trade Policy in the European Car Market," NBER Chapters, in: Empirical Studies of Strategic Trade Policy, pages 67-84 National Bureau of Economic Research, Inc.
    15. Harry Grubert & John Mutti, 1991. "Financial Flows versus Capital Spending: Alternative Measures of U.S.-Canadian Investment and Trade in the Analysis of Taxes," NBER Chapters, in: International Economic Transactions: Issues in Measurement and Empirical Research, pages 293-320 National Bureau of Economic Research, Inc.
    16. Rachel Griffith, 1999. "Using the ARD establishment level data to look at foreign ownership and productivity in the UK," IFS Working Papers W99/06, Institute for Fiscal Studies.
    17. Caves, Richard E, 1974. "Multinational Firms, Competition, and Productivity in Host-Country Markets," Economica, London School of Economics and Political Science, vol. 41(162), pages 176-93, May.
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