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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, October.
  • 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. 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.
    2. 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.
    3. Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995. "How Does Foreign Direct Investment Affect Economic Growth?," NBER Working Papers 5057, National Bureau of Economic Research, Inc.
    4. 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.
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    6. Layard, R & Nickell, S, 1989. "The Thatcher Miracle?," American Economic Review, American Economic Association, vol. 79(2), pages 215-19, May.
    7. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-47, October.
    8. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
    9. Nickell, S.J., 1993. "Competition and Crporate Performance," Economics Series Working Papers 99155, University of Oxford, Department of Economics.
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. Wilfred J. Ethier & James R. Markusen, 1991. "Multinational Firms, Technology Diffusion and Trade," NBER Working Papers 3825, National Bureau of Economic Research, Inc.
    15. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-98, March.
    16. 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.
    17. 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.
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