Exploring the Regional Distribution of Inbound Foreign Direct Investment in the UK in Theory and Practice: Evidence from a Five-Region Study

Abstract

This paper examines the main factors that attract inbound foreign direct investment (FDI) at the UK regional level, using econometric data from five sample UK regions (the South East, West Midlands, North West, Wales and Scotland) broadly representing the country's regional economic divide. The findings indicate that regional and national (but not EU-level) factors, linked to several underlying strategic determinants help determine the regional distribution of inbound FDI, and its inter-regional variation. The paper concludes that governmental policymakers at the national and regional levels can have an important role to play in drawing targeted FDI inflows to the UK regions.

Do I stay or do I go? Sub-national drivers for post-entry subsidiary development

“…Others suggest that the sub-national region dimension is important, if not crucial, for the competitive advantage of MNCs (Buckley & Ghauri, 2004;Porter, 1994;Porter & Sö lvell, 1998;Ricart, Enright, Ghemawat, Hart, & Khanna, 2004;Uhlenbruck, 2004). Indeed, recent studies on location choices of MNCs in transition economies have supported this by providing empirical evidence of the diversity of location-specific factors which drive the sub-national distribution of inward FDI in those markets (Chidlow et al, 2009;Fallon & Cook, 2010;Hilbert & Voicu, 2010).…”

“…The identification of any differences in subsidiary development in these regions points to the sensitivity of the location of businesses within a country to specific sub-national location conditions. Our study therefore contributes to a better understanding of the role that location plays for reinvestment and subsequent subsidiary development at a subnational level of location (Chidlow et al, 2009;Fallon & Cook, 2010;Hilbert & Voicu, 2010). This is, somehow, imperative in order to fully analyze the location of the MNC which in itself is ''an increasingly important determinant of the scope, pattern, form and growth of multinational enterprises' activity'' (Dunning, 2009: 26).…”

“…4) summarize by saying that while location characteristics matter more than ever to firms, the nation is no longer the lowest relevant level of analysis for location. Finally, the relative importance of local determinants of investment differs among foreign investors at the national level (Chung & Alcacer, 2002;Head & Mayer, 2004) and sub-national level (Chidlow et al, 2009;Fallon & Cook, 2010;Hilbert & Voicu, 2010;Ma et al, 2013).…”

Regional foreign direct investment potential of the states within the US

“…Bajo-Rubio, Diaz-Mora, and Diza-Roldan (2010) assessed impact of FDI on economic growth of Spanish regions. Fallon and Cook (2010) explored the regional distribution of FDI inflow in the UK studying its five regions. Last but not least, more recently some studies have been done on the FDI regional location choices in transition countries such as Hilber and Voicu (2010) using Romanian data.…”

“…Fallon and Cook (2010) concludes that governmental policy makers at the regional level can also have an important role in drawing targeted FDI inflow to their regions. Going beyond such regional policies, existing research suggests that regional, national and international factors, including policies, all work together to attract FDI inflow to a particular region in advanced industrial countries (Dunning, 2002;Hill & Munday, 1992Loewendahl, 2001;Phelps, Lovering, & Morgan, 1998;Stopford & Strange, 1991).…”