UK Foreign Direct Investment in uncertain economic times

Costas Milas, Theodore Panagiotidis and Georgios Papapanagiotou

Journal of International Money and Finance, 2024, vol. 147, issue C

Abstract: This paper uses time-varying Bayesian models to assess the impact of the shifting, and progressively more volatile (especially since the EU Referendum vote in 2016) macroeconomic landscape on Foreign Direct Investment (FDI) inflows to the UK. FDI inflows are depressed in response to higher UK-specific economic and geopolitical uncertainty. A stronger real exchange rate and a higher interest rate also have a negative effect. It benefits from lower UK corporate tax rates and higher US uncertainty, the latter creating investment opportunities in the UK. Rising economic policy uncertainty since the EU Referendum, has led to FDI losses of up to 0.5% of GDP.

Keywords: Foreign Direct Investment; Economic policy uncertainty; Brexit (search for similar items in EconPapers)
JEL-codes: C11 C32 F21 F23 F30 (search for similar items in EconPapers)
Date: 2024
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Working Paper: UK Foreign Direct Investment in Uncertain Economic Times (2024)
Working Paper: UK Foreign Direct Investment in Uncertain Economic Times (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:147:y:2024:i:c:s0261560624001190

DOI: 10.1016/j.jimonfin.2024.103132

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