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Re-Investment and the Survival of Foreign-Owned Plants

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  • Jonathan Jones
  • Colin Wren

Abstract

Foreign-owned plants have higher conditional exit rates, but this paper tests the hypothesis that re-investment 'embeds' these plants, leading to significantly longer survival time durations. A unique dataset is used for 265 plants that commenced in foreign ownership after 1985 in North East England, distinguishing between start-up ('greenfield') and acquisition plants. Survival is measured at 2000, and the paper analyses the duration to the first reinvestment and survival, allowing for selection into the multiple investment state. It finds that re-investment increases the lifetime of start-up plants, but this is insignificant once selection is controlled for, while for acquisition plants there is no difference. Grants affect selection, but not the survival of start-up plants. The paper offers little support for re-investment as a source of 'embeddedness'.

Suggested Citation

  • Jonathan Jones & Colin Wren, 2008. "Re-Investment and the Survival of Foreign-Owned Plants," SERC Discussion Papers 0003, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:sercdp:0003
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    More about this item

    Keywords

    FDI; re-investment; plant survival; exit; duration analysis; grants;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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