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).
We are grateful for comments from participants: in the Seminars on Regional Economic Modeling in Honor of Philip Israilevich, Federal Reserve Bank of Chicago, November 1998; the North American Regional Science Association, Santa Fe, November 1998; the NIESR Conference on Inward Investment, Technological Change And Growth: The Impact of Multinational Corporations on the UK Economy, September 1999; and The Network of Industrial Economists Meeting: Industrial Policy In A Devolved Economy, December 1999. We are also indebted to Scottish Enterprise National for funding related research.
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Gillespie, G., McGregor, P.G., Swales, J.K., Yin, Y.P. (2002). The Regional Impact of Foreign Direct Investment: Structure and Behavior in an Ownership-Disaggregated Computable General Equilibrium Model. In: Hewings, G.J.D., Sonis, M., Boyce, D. (eds) Trade, Networks and Hierarchies. Advances in Spatial Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-04786-6_5
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