Finance and International Direct Investment in the United Kingdom

  • Michael Beenstock
Part of the International Economics Study Group book series (IESG)

Abstract

Outward direct investment tends to be one of the more emotive elements in the capital account of the UK balance of payments. It is often argued that such investment creates jobs abroad instead of in the UK or that it weakens the balance of payments. Indeed the latter issue was directly addressed by Reddaway (1968). Likewise, it is often argued that inward direct investment is bad for the country because it leads to a drain of profits through the balance of payments instead of accruing to British firms or that foreign ownership makes the nation unnecessarily vulnerable to the whims of the internationals. These and related matters were considered by Steuer et al. (1973). More recently the Wilson Report1 recommends ‘that the government should initiate a wide-ranging review of the effects of portfolio and direct overseas investment, inward and outward, on the UK economy, embracing the consequences for the supply and cost of funds for UK investment as well as the effects on exports, the exchange rate and employment. The possibility of establishing a Foreign Investment Review Agency, as suggested by the TUC, could be considered as part of this review’ (p.247).

Keywords

Stake OECD 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. M. Beenstock (1977), ‘Policies towards international direct investment: a neoclassical reappraisal’, Economic Journal (Sept.).Google Scholar
  2. M. Beenstock (1978), The Foreign Exchanges: Theory, Modelling and Policy ( London: Macmillan).Google Scholar
  3. M. Beenstock and S.R. Bell (1979), ‘A quarterly econometric model of the capital account in the UK balance of payments’, Manchester School (Mar.).Google Scholar
  4. M. Beenstock and P. Willcocks (1980), ‘Capital formation in a small open economy’, London Business School, Mimeo.Google Scholar
  5. B.D. Boatwright and G.A. Renton (1975), ‘An analysis of United Kingdom inflows and outflows of direct foreign investment’, Review of Economics and Statistics (Nov.).Google Scholar
  6. J.H. Dunning (1979), ‘The UK’s international direct investment position in the mid 1970s’, Lloyds Bank Review (Apr.).Google Scholar
  7. J.F. Forsyth (1979), ‘Symmetrical treatment of surplus countries’, in R. Major (ed.), Britain’s Trade and Exchange Rate Policy (Heinemann).Google Scholar
  8. P. Hill (1979), Profit and the Rate of Return ( Paris: OECD).Google Scholar
  9. P. Minford (1978), Substitution Effects, Speculation and Exchange Rate Stability ( Amsterdam: North Holland).Google Scholar
  10. F. Modigliani and M. Miller (1958), ‘The cost of capital, corporation finance and the theory of investment’, American economic review (June).Google Scholar
  11. OECD (1979), International Direct Investment ( Paris: OECD).Google Scholar
  12. J. Polk, I.W. Meister and L. Veit (1966), US Production Abroad and the Balance of Payments ( New York: National Industrial Conference Board).Google Scholar
  13. W.B. Reddaway, et al. (1968), Effects of UK Direct Investment Overseas: Final Report ( Cambridge: Cambridge University Press).Google Scholar
  14. M.D. Steuer, et al. (1973), The Impact of Foreign Direct Investment in the UK (London: HMSO).Google Scholar
  15. D.B. Zenoff and J. Zwick (1969), International Financial Management ( Englewood Cliffs, N.J.: Prentice Hall).Google Scholar

Copyright information

© International Economics Study Group 1982

Authors and Affiliations

  • Michael Beenstock

There are no affiliations available

Personalised recommendations