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Foreign direct investment in industrial R&D and exchange rate uncertainty in the UK

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  • Bettina Becker
  • Stephen Hall

Abstract

Relatively little is known about the factors behind the gross level of international migrant flows into the UK, despite the rapid growth in the number of migrants seen in recent years. This matters because assumptions about the future evolution of migration are an important component of official judgements about the potential trend rate of economic growth. In this paper we develop the first detailed econometric model of the economic and demographic determinants of annual migrant inflows into the UK from a number of different locations. Some of the factors found to be important, such as Ôfriends and family' effects from existing migrants, income differentials between the host and source location and the demographic structure of the source location population, have been shown to matter in other host economies as well. But we also show that it is important to allow both for developments in other potential host locations and for heterogeneity in the speed with which migration from different source locations responds to changes in economic circumstances. Neither of these factors have been given much attention to date in the applied literature on international migration. We find that the change in migration over the decade to 1998-2000 is primarily due to population growth in the source locations and the continuing pull effects from the rise in the migrant stock and per capita incomes in the UK relative to the source location.
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Suggested Citation

  • Bettina Becker & Stephen Hall, 2004. "Foreign direct investment in industrial R&D and exchange rate uncertainty in the UK," Money Macro and Finance (MMF) Research Group Conference 2003 4, Money Macro and Finance Research Group.
  • Handle: RePEc:mmf:mmfc03:4
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    File URL: http://repec.org/mmfc03/BeckerHall.pdf
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    References listed on IDEAS

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    1. Darby, Julia, et al, 1999. "The Impact of Exchange Rate Uncertainty on the Level of Investment," Economic Journal, Royal Economic Society, vol. 109(454), pages 55-67, March.
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    Citations

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    Cited by:

    1. International Monetary Fund, 2004. "United Kingdom; Selected Issues," IMF Staff Country Reports 04/55, International Monetary Fund.
    2. Carlo Cottarelli & Julio Escolano, 2004. "Assessing the Assessment; A Critical Look At the June 2003 Assessment of the United Kingdom'S Five Tests for Euro Entry," IMF Working Papers 04/116, International Monetary Fund.
    3. Isabel Cristina Ruiz, 2005. "Exchange Rate as a Determinant of Foreign Direct Investment: Does it Really Matter? Theoretical Aspects, Literature Review and Applied Proposal," REVISTA ECOS DE ECONOMÍA, UNIVERSIDAD EAFIT, October.
    4. Isabel Ruiz, 2005. "Exchange Rate as a Determinant of Foreign Direct Investment: Does it Really Matter? Theoretical Aspects, Literature Review and Applied Proposal," International Trade 0511016, EconWPA.
    5. Phillips, Shauna & Ahmadi-Esfahani, Fredoun Z., . "Exchange Rates and Foreign Direct Investment: Theoretical Models and Empirical Evidence," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society.

    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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