How do firms’ outward FDI strategies relate to their activity at home? Empirical evidence for the UK

This paper investigates the structure of firms’ outward FDI and their behaviour at home in both manufacturing and business services sectors. UK multinationals with overseas affiliates in low-wage economies invest simultaneously in a large number of high-wage countries. I find that more productive multinationals operate in a greater number of countries, consistent with their being able to bear the fixed costs of investing in numerous locations abroad. UK manufacturing plants owned by large-scale, low-wage economy outward investors display lower domestic employment growth, in particular in low-skill activities, consistent with low-wage economy labour substituting for low-skill labour in the UK.multinational enterprises, skills, globalisation

Investment Abroad and Adjustment at Home: evidence from UK multinational firms

This paper provides new evidence on the effects of overseas FDI on the skill-mix of multinational firms’ home-country operations. The analysis exploits China’s WTO accession to identify the impact of outward investment into a low-wage economy, and uses plant-level data to investigate changes in industrial structure within firms driven by plant closures. As predicted by models of vertical FDI the paper demonstrates that overseas investment in low-wage economies is associated with asymmetric effects on workers in low and high skill industries in the home economy, and in particular with firms closing down plants in low-skill industries.multinational enterprises; skills; globalisation

Productivity in Public Services

This paper discusses issues arising in the measurement of productivity in public services. Compared to measuring productivity in the private sector difficulties arise because the output of public services is often un-priced and because some public services are consumed collectively. A key problem is measuring the full range of outputs and quality improvements delivered by public sector organisations that are valued by society. Without comprehensive measures of output productivity statistics may be misleading. I outline methods used in the measurement of both private and public sector productivity and discuss the measurement of public sector productivity in practice. Finally I discuss studies that examine factors underlying productivity differences and productivity growth in public and private sector organisations. Public sector reforms and the use of pilot schemes in public sector organisations present opportunities for research to identify causal effects on productivity.Productivity; Public enterprises

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

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.Multinational enterprises; skills; wages; globalisation

Geographic Proximity and Firm-University Innovation Linkages: evidence from Great Britain

We investigate evidence for spatially mediated knowledge transfer from university research. We examine whether firms locate their R&D labs in proximity to university research departments, and whether those that do are more likely to co-operate with, or source information from universities in the course of their innovative activities. We find evidence that pharmaceutical firms locate their R&D facilities near to frontier chemistry research departments, consistent with accessing localised knowledge spillovers, but also linked to the presence of science parks. In industries such as chemicals and vehicles there is less evidence of immediate co-location with universities, but those innovative firms that do locate near to relevant research departments are more likely to engage with universities.Innovation, Geography, spillovers, public research

Characteristics of foreign-owned firms in British manufacturing

This paper describes the characteristics of manufacturing establishments in Britain over the period 1980 to 1996. Particular attention is paid to differences between plants of different ownership nationality. The findings suggest that establishments that are always foreign-owned have significantly higher labour productivity than those that remain under domestic ownership. In addition, labour productivity improves faster over time and faster with age in foreign-owned establishments. The difference in labour productivity is matched by an equivalent difference in levels of investment per employee. Establishments that change ownership nationality do not seem to experience very large changes in labour productivity levels. The proportion of skilled workers in the workplace, and wages for both skilled and operative workers are higher in foreign-owned establishments than domestic-owned, in line with differences in labour productivity.foreign direct investment, productivity, multinational firms

Geographic proximity and firm-university innovation linkages: evidence from Great Britain

We investigate evidence for spatially mediated knowledge transfer from university research. We examine whether firms locate their R&D labs near universities, and whether those that do are more likely to co-operate with, or source knowledge from universities. We find that pharmaceutical firms locate R&D near to frontier chemistry research departments, consistent with accessing localised knowledge spillovers, but also linked to the presence of science parks. In industries such as chemicals and vehicles there is less evidence of immediate co-location, but those innovative firms that do locate near to relevant research departments are more likely to engage with universities.Innovation, geography, spillovers, public research

Characteristics of Foreign-Owned Firms in British Manufacturing

This paper describes the characteristics of manufacturing establishments in Britain over the period 1980 to 1996, paying particular attention to differences between establishments of different ownership nationalities. The findings suggest that establishments that are always foreign-owned have significantly higher labour productivity than those that remain under domestic ownership. In addition, labour productivity improves faster over time and faster with age in foreign-owned establishments. The difference in labour productivity is matched by an equivalent difference in levels of investment per employee. Establishments that change ownership nationality do not seem to experience very large changes in labour productivity levels. The proportion of skilled workers in the workplace, and wages for both skilled and operative workers are higher in foreign-owned establishments than domestic-owned, in line with differences in labour productivity.

Product market reform and innovation in the EU

European Union countries have implemented widespread reforms to product markets in order to stimulate competition, innovation and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market competition, as measured by a reduction in average profitability, and with a subsequent increase in innovation intensity and productivity growth for manufacturing sectors. In our analysis we exploit exogenous variation in the expected impact of the SMP across countries and industries to identify the effects of reforms on average profitability, and the effects of profitability on innovation and productivity growth.