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Investment abroad and adjustment at home: evidence from UK multinational firms

  • Helen Simpson


    (Institute for Fiscal Studies and CMPO, Bristol)

I use within-firm, plant-level data combined with geographic information on firms' overseas operations to examine how investment in low-wage economies affects firms' home-country operations. To remain close to theory I focus on changes in firms' organisational and industrial structure driven by plant closures. As predicted by models of vertical multinationals I find that investment in relatively low-wage economies is associated with plant closures in relatively low-skill, labour-intensive industries in the UK. The findings are of interest in the context of the relaxation of barriers to inward investment in low-wage economies.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W07/07.

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Date of creation: Mar 2007
Date of revision:
Handle: RePEc:ifs:ifsewp:07/07
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  29. repec:hrv:faseco:4784029 is not listed on IDEAS
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