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

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  • Helen Simpson

    () (Institute for Fiscal Studies and CMPO, Bristol)

Abstract

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.

Suggested Citation

  • Helen Simpson, 2007. "Investment abroad and adjustment at home: evidence from UK multinational firms," IFS Working Papers W07/07, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:07/07
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Johannes Becker & Clemens Fuest, 2011. "The taxation of foreign profits — The old view, the new view and a pragmatic view," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 46(2), pages 92-97, March.
    2. Johannes Becker, 2013. "Taxation of Foreign Profits with Heterogeneous Multinational Firms," The World Economy, Wiley Blackwell, vol. 36(1), pages 76-92, January.
    3. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
    4. Richard Kneller & Danny McGowan & Tomohiko Inui & Toshiyuki Matsuura, 2012. "Closure within multi-plant firms: evidence from Japan," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(4), pages 647-668, December.

    More about this item

    Keywords

    Multinational enterprises; skills; wages; globalisation;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business

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