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Re-investment and the survival of foreign-owned plants

By Jonathan Jones and Colin Wren

Abstract

Foreign-owned plants have higher conditional exit rates, but this paper tests the hypothesis that re-investment "embeds" these plants, leading to significantly longer survival time durations. A unique dataset is used for 265 plants that commenced in foreign ownership after 1985 in North East England, distinguishing between start-up ("greenfield") and acquisition plants. Survival is measured at 2000, and the paper analyses the duration to the first reinvestment and survival, allowing for selection into the multiple investment state. It finds that re-investment increases the lifetime of start-up plants, but this is insignificant once selection is controlled for, while for acquisition plants there is no difference. Grants affect selection, but not the survival of start-up plants. The paper offers little support for re-investment as a source of "embeddedness"

Topics: HC Economic History and Conditions
Publisher: Spatial Economics Research Centre (SERC), London School of Economics and Political Science
Year: 2008
OAI identifier: oai:eprints.lse.ac.uk:33138
Provided by: LSE Research Online

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