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Investment, capital and foreign ownership in UK manufacturing

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Abstract

This paper studies physical investment in UK manufacturing from the viewpoint of the individual establishment, i.e. business or plant. It uses the new longitudinal database of the Census of Production, the ARD. I construct a sample of 1,752 establishments which survived over 1973-93 and estimate their capital stocks. These survivors accounted for about a third of manufacturing employment. From production function estimates, the neo-classical view that the elasticity of output with respect to capital is equal to capital's share cannot be rejected. Capital intensity varies widely across establishments even in the same SIC80 Class. It is 50% higher in foreign- owned establishments which are also more human capital intensive. Value added per worker is 38% higher in foreign-owned establishments. Human and physical capital intensity differences are a significant determinant of productivity gaps between establishments. Even after allowing for their higher capital intensity, US-owned (but not other foreign-owned) establishments have an additional productivity advantage of between

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  • Nick Oulton, 1998. "Investment, capital and foreign ownership in UK manufacturing," National Institute of Economic and Social Research (NIESR) Discussion Papers 141, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrd:141
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    Cited by:

    1. Marko Ogorevc & Miroslav VerbiÄ, 2013. "Ownership and wages: spatial econometric approach," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 5(2), pages 207-224.
    2. Dirk Willem Te Velde, 2002. "Foreign Ownership and Wages in British Establishments," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 101-108.
    3. Gustavo Crespi & Chiara Criscuolo & Jonathan Haskel, 2006. "Information Technology, Organisational Change and Productivity Growth: Evidence from UK Firms," Working Papers 558, Queen Mary University of London, School of Economics and Finance.
    4. Yama Temouri & Nigel L. Driffield & Dolores Añón Higón, 2008. "Analysis of Productivity Differences among Foreign and Domestic Firms: Evidence from Germany," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(1), pages 32-54, April.
    5. Richard Harris & Catherine Robinson, 2003. "Foreign Ownership and Productivity in the United Kingdom Estimates for U.K. Manufacturing Using the ARD," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(3), pages 207-223, May.
    6. Nasrollahi Shahri, Nima, 2010. "The Effectiveness of international investment instruments on the amount of foreign investment (a case study of Iran)," MPRA Paper 36317, University Library of Munich, Germany.
    7. Ergun Dogan & Koi Wong & Michael Yap, 2013. "Turnover, ownership and productivity in Malaysian manufacturing," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 18(1), pages 26-50.
    8. Haskel, Jonathan & Criscuolo, Chiara & ,, 2007. "Information Technology, Organisational Change and Productivity," CEPR Discussion Papers 6105, C.E.P.R. Discussion Papers.

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