The Effects on American Foreign Direct Investment in the United Kingdom from not Adopting the Euro

The decision of the United Kingdom not to adopt the common European currency can be understood as a policy intervention in a single country within the European Union. The aim of this article is to analyse the consequences of this decision on the foreign direct investment received by this country. This is done by the application of a synthetic control method designed for policy evaluation. As a result, evidence of a significant cost in terms of inward foreign direct investment from the United States is obtained.

[1]  J. Markusen.  Multinational Firms and the Theory of International Trade , 2002 .

[2]  Lon-Mu Liu,et al.  Joint Estimation of Model Parameters and Outlier Effects in Time Series , 1993 .

[3]  R. Barro,et al.  International Data on Educational Attainment Updates and Implications , 2000 .

[4]  J. Markusen,et al.  MULTINATIONALS, MULTI-PLANT ECONOMIES, AND THE GAINS FROM TRADE , 1984, World Scientific Studies in International Economics.

[5]  Elhanan Helpman,et al.  A Simple Theory of International Trade with Multinational Corporations , 1984, Journal of Political Economy.

[6]  Alberto Abadie,et al.  The Economic Costs of Conflict: A Case Study of the , 2003 .

[7]  D. Andrews.  Tests for Parameter Instability and Structural Change with Unknown Change Point , 1993 .

[8]  P. Perron,et al.  Estimating and testing linear models with multiple structural changes , 1995 .

[9]  J. Lochard,et al.  Does the Single Currency Affect Foreign Direct Investment? , 2011 .

[10]  Philip Hans Franses,et al.  Non-Linear Time Series Models in Empirical Finance , 2000 .

[11]  Pierre Perron,et al.  Structural breaks with deterministic and stochastic trends , 2005 .

[12]  Pierre Perron,et al.  Testing for Shifts in Trend With an Integrated or Stationary Noise Component , 2007 .

[13]  F. Wilcoxon.  Individual Comparisons by Ranking Methods , 1945 .

[14]  The Impact of the Introduction of the Euro on Foreign Exchange Rate Risk Exposures , 2010 .

[15]  D. Andrews.  Tests for Parameter Instability and Structural Change with Unknown Change Point , 1993 .

[16]  David Thesmar,et al.  Performance and Behavior of Family Firms: Evidence from the French Stock Market , 2006 .

[17]  Maria Borga,et al.  Direct Investment Positions for 2003: Country and Industry Detail , 2002 .

[18]  P. Howard.  Why Britain should join the euro , 2010 .

[19]  Christopher Taylor.  Foreign Direct Investment and the Euro: The First Five Years , 2007 .

[20]  Bruce A. Blonigen,et al.  FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment , 2004, World Scientific Studies in International Economics.

[21]  Badi H. Baltagi,et al.  Estimating models of complex FDI: Are there third-country effects? , 2007 .

[22]  Stefano Schiavo,et al.  Common Currencies and FDI Flows , 2005 .

[23]  David Barr,et al.  Life on the outside: economic conditions and prospects outside euroland , 2003 .

[24]  Söhnke M. Bartram,et al.  The Euro and European Financial Market Dependence , 2007 .

[25]  Mark P. Taylor,et al.  What if the UK or Sweden had joined the Euro in 1999? An empirical evaluation using a global VAR , 2007 .

[26]  Badi H. Baltagi,et al.  Testing for Serial Correlation, Spatial Autocorrelation and Random Effects , 2004 .

[27]  Richard Paap,et al.  The Trade and FDI Effects of EMU Enlargement , 2007, SSRN Electronic Journal.

[28]  Daria Taglioni,et al.  Trade Effects of the Euro: a Comparison of Estimators , 2007 .

[29]  M. Artis.  The UK and the Eurozone , 2006 .

[30]  Mattias Nilsson,et al.  The Real Effects of the Euro: Evidence from Corporate Investments , 2004 .

[31]  June,et al.  Does the single currency a ect FDI? A gravity-like approach , 2006 .

[32]  Pavlos Petroulas,et al.  The effect of the euro on foreign direct investment , 2007, SSRN Electronic Journal.