FDI in the UK Car Component Industry: Recent Causes and Consequences

David Pickernell

Tijdschrift voor Economische en Sociale Geografie, 1998, vol. 89, issue 3, 239-252

Abstract: This paper examines the 1985–93 influx of foreign direct investment (FDI) into the UK automotive component industry from European and Japanese companies. The study of 27 investors found that the market and growth potential of the Japanese car transplants Honda (Swindon), Nissan (Sunderland) and Toyota (Burnaston) was by far the most important reason for their location decision overall, regardless of whether the firm was European or Japanese owned. The Single Market programme was not directly important to the component firms' location decisions overall, though indirectly it could have been influential in the decisions of the Japanese car assemblers to locate in the UK. Interviews revealed the effects that FDI was having on the UK industry in closing product gaps and on research and development. These results may have important policy implications for government agencies concerning the attraction of FDI, where it should be attracted, and the effects of such FDI.

Date: 1998
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