Indirect employment effects of Foreign Direct Investment into the UK

Nigel Driffield

Research output: Contribution to journalArticlepeer-review


This paper examines some of the employment consequences, broadly defined, associated with foreign inward investment. A foreign firm entering an industry in the UK will have a degree of firm-specific advantage oover the incumbent firms. This advantage is assumed to manifest itself in terms of a productivity differential over the domestic sector. As such, foreign entry will create factor market disequlibrium in the domestic sector. It is shown that such investment generates 'employment substitution' away from UK firms, equivalent to approximately one-fifth of all the jobs created by inward investment.
Original languageEnglish
Pages (from-to)207-222
Number of pages16
JournalBulletin of Economic Research
Issue number3
Publication statusPublished - Jul 1999


  • employment
  • foreign inward investment
  • productivity differential
  • domestic sector
  • factor market disequilibrium


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