Foreign direct investment in European manufacturing industry: the changing position of the United Kingdom as a host country

Abstract

The position of the United Kingdom as a host country for foreign direct investment in manufacturing is examined in the European context. Several trends are identified which suggest that the United Kingdom's relative position is changing. In particular, the balance of United States manufacturing investment has been shifting away from the United Kingdom and towards mainland Europe while the United Kingdom's membership of the EEC enables European countries to serve the United Kingdom market by exporting rather than by direct investment. As yet, the volume of Japanese investment in United Kingdom and European manufacturing is small. In the competition between nations for internationally mobile investment. Ireland has captured a good deal of new manufacturing investment, some of which may have been ‘diverted’ from the United Kingdom. The apparent decline in the attractiveness of the United Kingdom as a host country for foreign manufacturing investment could have serious consequences for employment in the peripheral regions of the United Kingdom particularly in the light of developments in the organization of multinational enterprise and the impending enlargement of the EEC.