ASSESSING THE REGIONAL IMPACT OF GRANTS ON FDI LOCATION: EVIDENCE FROM U.K. REGIONAL POLICY, 1985–2005 |
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| Authors: | Colin Wren Jonathan Jones |
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| Affiliation: | 1. Department of Economics, Newcastle University Business School, Newcastle University, Newcastle upon Tyne, NE1 7RU, United Kingdom. E‐mail: c.m.wren@ncl.ac.uk;2. Department of Economics, Newcastle University Business School, Newcastle University, Newcastle upon Tyne, NE1 7RU, United Kingdom. E‐mail: jonathan.jones@ncl.ac.uk |
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| Abstract: | ABSTRACT The paper implements a methodology for assessing the regional impact of investment grants on foreign direct investment (FDI) location, taking data for U.K. regional policy over the period 1985–2005. Using a Generalized Methods of Moments estimator it finds that each £25 million of grant changes the regional location of about six inward FDI projects. On average, projects have 150 jobs and each job diverted costs £27,500 (1995 prices). It also finds that the size of the area designated for grants has a positive location effect. The effect is small in relation to the overall scale of FDI, which may explain the weak grant effect found in recent plant‐based location studies. |
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