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the UK’s productivity problems.

Inward investment and UK productivity

The purpose of this paper is top explore the role that foreign direct investment can play in improving productivity, and the mechanisms by which this occurs that are identified in the literature. In doing this we draw on literature from economics, international business and regional science, and seek to highlight both the overlaps and the gaps in this literature. We also seek to contrast the different approaches, particularly in terms of data requirements, and assumptions regarding for example the trade-offs between data quantity, and the desire to understand firm strategy and interactions. Finally, we explore what lessons this offers to policy makers, particularly in terms of the distinction between “maximising the amount of inward investment” that a region attracts, and “maximising the benefits” of that investment.

Authors Nigel Driffield, Katiuscia Lavoratori, Yama Temouri


  • Organisational Capital




N.Driffield, K. Lavoratori, Y. Temouri (2021) Inward investment and UK productivity. Working Paper No. 014, The Productivity Institute.