How do UK companies' outward FDI strategies relate to their activity at home?

This project investigates the relationship between companies’ outward foreign direct investment and their behaviour at home in both the manufacturing and business services sectors. We find that UK multinationals with overseas affiliates in low-wage economies also invest simultaneously in a large number of high-wage countries. In addition, more productive multinationals operate in a greater number of countries, consistent with their being able to bear the fixed costs of investing in numerous locations abroad. UK manufacturing plants owned by large-scale, low-wage economy outward investors display lower domestic employment growth, in particular in lowskill activities, consistent with low-wage economy labour substituting for low-skill labour in the UK.

Helen Simpson