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The Regional Impact of Foreign Direct Investment: Structure and Behavior in an Ownership-Disaggregated Computable General Equilibrium Model

  • Gary Gillespie
  • Peter G. McGregor
  • J. Kim Swales
  • Ya Ping Yin
Part of the Advances in Spatial Science book series (ADVSPATIAL)

Abstract

Despite government rhetoric in support of indigenous regional development, in practice the attraction of foreign-owned inward investment remains a key plank of regional policy. Just under half of all expenditure on UK Regional Selective Assistance (RSA) is awarded to foreign-owned firms (PA Cambridge Economic Consultants, 1993) and individual regional development agencies vie for the attraction of incoming plants, often offering an extensive package of incentives.2 In Gillespie et al (2001a) we assess the impact of RSA-assisted investment on the Scottish economy using a computable general equilibrium (CGE) approach. Our earlier analysis makes no distinction between the foreign- and UK-owned manufacturing sectors, yet the former accounted for 39% and 23% of Scottish Manufacturing gross output and employment, respectively, during 1996 (Scottish Office, 1999). There is, therefore, a substantial foreign-owned component of Scottish manufacturing, and this may have a significant impact on the behavior of the regional economy of Scotland. Accordingly, in this chapter we refine our earlier approach to focus directly on the employment effects of export-oriented Foreign Direct Investment (FDI).

Keywords

Foreign Direct Investment Capital Stock Real Wage Regional Impact Employment Effect 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2002

Authors and Affiliations

  • Gary Gillespie
    • 1
  • Peter G. McGregor
    • 1
  • J. Kim Swales
    • 1
  • Ya Ping Yin
    • 2
  1. 1.Fraser of Allander Institute and International Centre for Macroeconomic Modelling, Department of EconomicsUniversity of StrathclydeGlasgowScotland
  2. 2.Department of Economics, Social Sciences and TourismUniversity of HertfordshireHatfieldEngland

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