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Brexit and Japanese foreign direct investment in the UK: a sectoral analysis
[A knowledge and physical Capital model of international trade flows, foreign direct investment and multinational enterprises]

Author

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  • Andrzej Cieślik
  • Michael Ryan

Abstract

Political and economic stability significantly affect the economic performance of a country and its ability to attract inward investment. This article investigates Brexit-associated uncertainty and Japanese foreign direct investment (FDI) inflows into the UK. In contrast to most previous studies that use pre-vote behaviour to model post-vote outcomes, we include both pre- and post-announcement and post-vote data on Japanese firm-level FDI activity into Europe. In a Knowledge-Capital framework, we examine the annual count of newly established Japanese foreign affiliates into 80 countries between the years 1995 and 2019. Results from a negative binomial model reveal a statistically significant relationship between the Brexit announcement and decreased FDI in the UK. Our results identify significant sectoral heterogeneity, indicating the difficulty in making broad claims as to Brexit’s effect on the British economy’s future.

Suggested Citation

  • Andrzej Cieślik & Michael Ryan, 2022. "Brexit and Japanese foreign direct investment in the UK: a sectoral analysis [A knowledge and physical Capital model of international trade flows, foreign direct investment and multinational enterp," Oxford Economic Papers, Oxford University Press, vol. 74(4), pages 959-975.
    • Handle: RePEc:oup:oxecpp:v:74:y:2022:i:4:p:959-975.
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    File URL: http://hdl.handle.net/10.1093/oep/gpac004
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    Citations

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    Cited by:

    1. Milas, Costas & Panagiotidis, Theodore & Papapanagiotou, Georgios, 2024. "UK Foreign Direct Investment in uncertain economic times," Journal of International Money and Finance, Elsevier, vol. 147(C).
    2. Nigel Driffield & Irina Surdu & Xiaocan Yuan, 2024. "Country-level dynamic capabilities and inward FDI: a framework on future policy adaptations applied to post-Brexit UK," Journal of International Business Policy, Palgrave Macmillan, vol. 7(3), pages 276-294, September.
    3. Massimiliano Porto & Agata Wierzbowska, 2023. "Has Brexit affected employment in Japanese affiliates in the UK?," Economic Affairs, Wiley Blackwell, vol. 43(3), pages 314-339, October.

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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