The impact on domestic productivity of inward investment in the UK

Driffield, Nigel (2001). The impact on domestic productivity of inward investment in the UK. Manchester School, 69 (1), pp. 103-119.


One of the basic tenets of UK industrial policy, that attracting inward investment into the UK stimulates domestic productivity growth, is examined. A model of productivity growth is developed for the indigenous sector of UK manufacturing, linking domestic productivity growth to theoretical explanations of inward investment. The paper demonstrates that inward investment does stimulate productivity growth in the domestic sector of around 0.75 per cent per annum. However, this cannot be attributed to investment or output spillovers, but is a result of the productivity advantage exhibited by the foreign firms.

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Divisions: Aston Business School > Economics finance & entrepreneurship
Additional Information: © Blackwell Publishing Ltd and The Victoria University of Manchester, 2001. The definitive version is available at
Uncontrolled Keywords: UK,industrial policy,inward investment,domestic productivity growth,manufacturing
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Published Date: 2001
Authors: Driffield, Nigel



Version: Draft Version

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