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Abstract for:

Re-Investment and the Survival of Foreign-Owned Plants

Jonathan  Jones,  Colin  Wren,  August 2008
Paper No' SERCDP0003: | Full paper (pdf)
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Keywords: FDI; re-investment; plant survival; exit; duration analysis; grants

JEL Classification: O12;L20;R58

Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: SERC Discussion Papers
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Abstract:

Foreign-owned plants have higher conditional exit rates, but this paper tests the hypothesis that re-investment 'embeds' these plants, leading to significantly longer survival time durations. A unique dataset is used for 265 plants that commenced in foreign ownership after 1985 in North East England, distinguishing between start-up ('greenfield') and acquisition plants. Survival is measured at 2000, and the paper analyses the duration to the first reinvestment and survival, allowing for selection into the multiple investment state. It finds that re-investment increases the lifetime of start-up plants, but this is insignificant once selection is controlled for, while for acquisition plants there is no difference. Grants affect selection, but not the survival of start-up plants. The paper offers little support for re-investment as a source of 'embeddedness'.