Assessing the Regional Impact of Grants on FDI Location: Evidence from U.K. Regional Policy, 1985-2005

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  2. Professor Colin Wren
  3. Dr Jonathan Jones
Author(s)Wren C, Jones J
Publication type Article
JournalJournal of Regional Science
ISSN (print)0022-4146
ISSN (electronic)1467-9787
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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.
PublisherWiley-Blackwell Publishing, Inc.
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