Explaining employment changes in foreign manufacturing investment in the UK

✍ Scribed by David Williams

• Publisher: Elsevier Science
• Year: 2003
• Tongue: English
• Weight: 115 KB
• Volume: 12
• Category: Article
• ISSN: 0969-5931
• DOI: 10.1016/s0969-5931(03)00040-4

✦ Synopsis

This article tests the view that the impact which foreign direct investment (FDI) has upon employment within the host economy will vary according to the entry mode which the multinational enterprise (MNE) chooses, the type of subsidiary and the nationality of the parent organisation which is established in the regional economy. Data were collected from the subsidiaries of foreign-owned firms in the UK. A model was devised and tested with estimations using this data. The results provide support for the view that the impact of FDI may be differentiated by entry mode, nationality and subsidiary type. Specifically, firms which entered by way of greenfield investment created positive employment effects as compared to those which entered by means of a merger or acquisition where the effects were relatively negative. There is some evidence that impact is also ownership specific. Finally, those subsidiaries which performed more value-added functions had a positive effect on employment.