Who Benefits from Foreign Direct Investment in the UK?

15 Pages Posted: 4 Oct 2013

See all articles by Sourafel Girma

Sourafel Girma

Nottingham University Business School

David Greenaway

University of Nottingham - School of Economics

Katharine Wakelin

University of Nottingham - School of Economics

Date Written: November 2013

Abstract

The presumed higher productivity of foreign firms and resulting spillovers to domestic firms has led governments to offer financial incentives to foreign firms. We investigate if there is any productivity or wage gap between foreign and domestic firms in the UK and if the presence of foreign firms in a sector raises the productivity of domestic firms. Our results indicate that foreign firms do have higher productivity than domestic firms and they pay higher wages. We find no aggregate evidence of intra‐industry spillovers. However, firms with low productivity relative to the sector average, in low‐skill low foreign competition sectors gain less from foreign firms.

Suggested Citation

Girma, Sourafel and Greenaway, David and Wakelin, Katharine, Who Benefits from Foreign Direct Investment in the UK? (November 2013). Scottish Journal of Political Economy, Vol. 60, Issue 5, pp. 560-574, 2013. Available at SSRN: https://ssrn.com/abstract=2335787 or http://dx.doi.org/10.1111/sjpe.12023

Sourafel Girma (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

David Greenaway

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 951 5469 (Phone)
+44 115 951 4159 (Fax)

Katharine Wakelin

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 951 4734 (Phone)
+44 115 951 4159 (Fax)

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