43 research outputs found

    Job loss and job creation : pitfalls and opportunities? Brexit, foreign investment and employment

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    This briefing outlines recent policy-orientated research from the University of Warwick on the impact of Brexit on inward foreign direct investment (FDI) and employment. It presents a number of policy recommendations based on this research, to mitigate the negative effects of Brexit on inward investment and job creation. Above all, the Government needs to avoid a hard Brexit that sees tariff barriers returning, and secure a trade deal that prioritises access to the single market for as many sectors as possible, as soon as possible

    Inward investment, transaction linkages and productivity spillovers

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    The article examines the extent to which foreign manufacturing firms in the UK promote productivity growth in the domestically owned manufacturing sector through their buying and supplying relationships. Evidence for intra- and inter-regional externalities from the presence of foreign manufacturing, and intraand inter-industry effects is brought to light. Externalities in the domestic sector are most noticeable where foreign manufacturing sells to domestic manufacturing. These externalities are, however, not wholly robust to different specifications of spatial dependence. The findings are positioned in a debate, which has tended to view backward (as opposed to forward) linkages from multinationals to domestically owned supply bases as a critical driver of indirect economic benefits. © RSAI 2004

    FDI, trade and growth, a causal link?

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    . FDI, Trade and Growth, a Causal Link? (RP0710) Prof Nigel DRIFFIELD Dr Rakesh BISSOONDEEAL Mayang Pramadhani Non-technical Summary This paper explores the relationship between imports, exports, foreign direct investment and growth. For some time there has been a good deal of debate whether trade and foreign direct investment) FDI are substitutes and complements, with the existing literature generating some rather contradictory findings. We show, for Indonesia that inward FDI and both imports and exports are complementary, and further that FDI causes an increase in trade. This is of particular interest for a country such as Indonesia, that has attracted a high proportion of export-orientated inward investment. This, theoretically at least is associated with an increase in imports, in the form of capital goods and components, but a reduction in imports. We show that the previous literature that fails to find such a relationship does so because both trade and FDI are associated with growth, and previous work ignores these growth effects when seeking to isolate the relationship between trade and FDI

    Institutional reforms, productivity and profitability:from rents to competition?

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    This paper explores the divergent effects of institutional reforms on firm's productivity and profits. To assess this empirically, we investigate the impact of various components of economic liberalisation on the performance of firms from Central and Eastern European countries from 1998 to 2006. The impact of reforms on profitability vis-à-vis productivity differs, which we interpret as an indication that profitability is an ambiguous measure of performance: one needs to distinguish between unproductive rents and productivity-based quasi-rents. We find that competition-enhancing liberalisation measures have more impact on state owned firms as compared with domestic and foreign owned firms

    Country specific advantage, firm specific advantage and multinationality – sources of competitive advantage in emerging markets : evidence from the electronics industry in China

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    The extant literature on emerging market multinationals (EMNEs) suggest that they derive their advantages from country-specific advantages (CSAs) such as economies of scale, as opposed to traditional firm specific advantage (FSA) such as technology. We use firm level data from the Chinese electronics industry and an empirical methodology that has thus far not been used in the literature to provide clear empirical support for this proposition. Further, we demonstrate that not all emerging market firms can leverage CSAs equally and that EMNEs are better at exploiting CSAs than their non-MNE domestic counterparts. We also demonstrate that developed country MNEs operating in emerging market economies are not as good as leveraging available CSAs as their EMNE competitors, arguably on account of liability of foreignness. Our results have implications for outward investment by emerging market firms as well as for the ability of developed country MNEs to significantly benefit from efficiency-seeking FDI in emerging market economies

    Technology flows, outsourcing and productivity:an analysis of UK trade and FDI

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    The literature on technology spillovers from trade and FDI is ambiguous in its findings. This may in part be because of the assumption in much of the work that trade and FDI flows are homogeneous in their determinants and thus in their effects. We develop a taxonomy of trade and FDI determinants based on R&D intensity and unit labour cost differentials, and test for the presence of spillovers from inward investment and imports on an extensive sample of UK manufacturing plants. We find that both trade and FDI have measurable spillover effects, but the sign and extent of these effects varies depending on the technological and factor cost differentials between the recipient and host economies. There is therefore an identifiable link between the determinants and effects of trade and FDI which the previous literature has not explored

    A strategic perspective of cross-listing by emerging market firms : evidence from Indonesia, Mexico, Poland and South Africa

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    This paper develops an approach to the analysis of cross-listing that brings together the financial and non-financial benefits of the phenomenon. We employ the real options framework, which offers a detailed characterisation of the strategic issues associated with cross-listing, in context of internationalisation of emerging market firms. The associated hypotheses are tested using firm-level data from four large emerging market economies with different profiles in terms of institutional quality and financial development. This allows us to extend the existing literature by isolating the relative importance of institutional quality and financial development for benefits of cross-listing

    The future of offshoring FDI in high-tech sectors

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    This paper examines what is still a relatively new phenomenon in the literature, the outsourcing/offshoring of high-technology manufacturing and services. This has become a concern for both policy makers and academics for two reasons. Firstly, policy makers have become concerned that the offshoring of high-technology sectors in the West will follow the more labour intensive sectors, and move to lower cost locations. Secondly, international business theory has tended to view low costs, and high levels of indigenous technological development as being the two main drivers of location advantage in the attraction of FDI. We show that this may not be the case for offshored high-technology manufacturing or services

    Multinational enterprises and the welfare state

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    This paper presents an empirical analysis on the extent to which a country’s welfare spending influences foreign direct investment (FDI) decisions, particularly as they relate to relocations. We argue, and subsequently empirically test, that higher welfare spending by governments attracts foreign investment. Moreover, multinational enterprises (MNEs) located in high welfare spending countries have a lower likelihood of relocating to foreign markets compared with MNEs in countries with lower levels of welfare spending. Using data for MNEs in 27 OECD countries, our results show that MNE location decisions are positively related to welfare spending. These findings appear to be more pronounced for MNEs operating in high-tech rather than in low-tech manufacturing industries. Our results suggest that high welfare spending does deter FDI in the case of host developing economies, but that these effects are small. We suggest that this is a result of firms being more hesitant to invest in developing countries where they will be expected to contribute to welfare. This suggests that a degree of trust between firms and host country governments is required on institution building and the delivery of welfare. Our results suggest that the conventional wisdom of firms avoiding or relocating away from locations due to the associated additional costs of high welfare spending is questionable, but that firms need to be confident on the efficacy of this welfare expenditure
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