Finance and International Direct Investment in the United Kingdom

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


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).


Direct Investment Foreign Currency Parent Company Capital Account Interest Rate Differential 
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Copyright information

© International Economics Study Group 1982

Authors and Affiliations

  • Michael Beenstock

There are no affiliations available

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