Foreign Ownership and Productivity: New Evidence from the Service Sector and the R&D Lab

Rachel Griffith, Stephen Redding and Helen Simpson

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper examines the relationship between foreign ownership and productivity, paying particular attention totwo issues neglected in the existing literature - the role of multinationals in service sectors and the importanceof R&D activity conducted by foreign multinationals. We review existing theoretical and empirical work, whichlargely focuses on manufacturing, before presenting new evidence using establishment-level data on production,service and R&D activity for the United Kingdom. We find that multinationals play an important role in servicesectors and that entry of foreign multinationals by takeover is more prevalent than greenfield investment. Wefind that British multinationals have lower levels of labour productivity than foreign multinationals, but thedifference is less stark in the service sector than in the production sector, and that British multinationals havelower levels of investment and intermediate use per employee. We also find that foreign-owned multinationalsconduct a substantial amount of UK R&D. We discuss the implications of these and other findings for the policydebate on incentives to influence multinational firms' location choices.

Keywords: Foreign Investment; Productivity; Knowledge Spillovers (search for similar items in EconPapers)
JEL-codes: F23 L60 L80 O47 (search for similar items in EconPapers)
Date: 2004-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (94)

Downloads: (external link)
https://cep.lse.ac.uk/pubs/download/dp0649.pdf (application/pdf)

Related works:
Journal Article: Foreign Ownership and Productivity: New Evidence from the Service Sector and the R&D Lab (2004)
Working Paper: Foreign Ownership and Productivity: New Evidence from the Service Sector and the R&D Lab (2004)
Working Paper: Foreign Ownership and Productivity: New Evidence from the Service Sector and the R&D Lab (2004)
Working Paper: Foreign ownership and productivity: new evidence from the service sector and the R&D lab (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0649

Access Statistics for this paper

More papers in CEP Discussion Papers from Centre for Economic Performance, LSE
Bibliographic data for series maintained by ().