This paper examines the extent to which foreign investment in the UK generates wage spillovers in the domestic sector of the economy using a simultaneous dynamic panel data model and focusing on the electronics sector, possibly the most ‘globalized’ sector of UK manufacturing. It finds evidence that the higher wages paid by foreign firms cause wages in the domestic sector to be bid up. This phenomenon is, however, largely confined to the region where foreign direct investment takes place.
Bibliographical noteThe definitive version is available at www.blackwell-synergy.com
© 2003 Blackwell Publishing Ltd and the Department of Economics, University of Oxford
- foreign investment
- wage spillovers
- domestic sector
- electronics sector