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

No W07/07, IFS Working Papers from Institute for Fiscal Studies

Abstract:

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.

Keywords: Multinational enterprises; skills; wages; globalisation (search for similar items in EconPapers)
JEL-codes: F2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: Written 2007-03
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