Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71598
Authors: 
Griffith, Rachel
Redding, Stephen
Simpson, Helen
Year of Publication: 
2004
Series/Report no.: 
IFS Working Papers, Institute for Fiscal Studies (IFS) 04/22
Abstract: 
This paper examines the relationship between foreign ownership and productivity, paying particular attention to two issues neglected in the existing literature Ö the role of multinationals in service sectors and the importance of R&D activity conducted by foreign multinationals. We review existing theoretical and empirical work, which largely focuses on manufacturing, before presenting new evidence using establishmentlevel data on production, service and R&D activity for the United Kingdom. We find that multinationals play an important role in service sectors and that entry of foreign multinationals by takeover is more prevalent than greenfield investment. We find that British multinationals have lower levels of labour productivity than foreign multinationals, but the difference is less stark in the service sector than in the production sector, and that British multinationals have lower levels of investment and intermediate use per employee. We also find that foreign-owned multinationals conduct a substantial amount of UK R&D. We discuss the implications of these and other findings for the policy debate on incentives to influence multinational firms' location choices.
Subjects: 
Foreign Investment
Productivity
Knowledge Spillovers
JEL: 
F23
O47
L60
L80
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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