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We develop a taxonomy which relates FDI motivation (technology and cost-based) to its anticipated effects on host countries' domestic productivity. We then empirically examine the effects of FDI into the United Kingdom on domestic productivity and find that different types of FDI have markedly different productivity spillover effects, which are consistent with the conceptual analysis. The UK gains substantially only from inward FDI motivated by a strong technology-based ownership advantage. As theory predicts, inward FDI motivated by technology sourcing considerations leads to no productivity spillovers.

The present paper examines the effects of ownership structures on capital structure and firm valuation. It argues that the effects of separation of control from cash flow rights on capital structure and firm value also depend on the separation of control from management as well as on legal rules and enforcement defining investors' protection. We obtain firm-level panel data (three stage least squares, 3SLS) estimates from four of the East Asian countries worst affected by the last crisis. There is evidence that the general wisdom that higher control than cash flow rights may lower firm value may be reversed among owner-managed family firms in the sample countries.JEL classifications: G32, L25. Keywords: Asian crisis, corporate governance, separation of control and cash flow rights, separation of control and management, owner managed family firms, capital structure, firm value, 3SLS estimates with error components, simultaneity bias. 269786. The research is funded by the ESRC grant number RES-000-22-0200. We are very grateful to Stijn Claessens for the ownership data and also for his very helpful comments on an earlier draft. We owe extensive gratitude to the editor Erik Berglöf and an anonymous referee of this Journal for very constructive comments at different stages. We would also like to thank John Bennett, Tomek Mickiewicz, Kunal Sen, Ajit Singh and the participants in the ESRC workshop on 'Corporate Governance, Corporate Restructuring and Corporate Finance in Transition Economies' held in Brunel University, London in September 2005 for their comments and advice. We are however solely responsible for any errors. 536 D riffield, M ahambare and P al

Despite the increased attention on the impacts of globalisation, there has been little empirical investigation into the impact of multinational firms on the domestic labour market and in particular wage inequality, this is in spite of a rapid increase in foreign direct investment (FDI) at around the same time of rising inequality. Using UK panel data, this paper tests whether inward flows of FDI have contributed to increasing wage inequality. Even after controlling for the two most common explanations of wage inequality, technology and trade, we find that FDI has a significant effect upon wage inequality, with the overall impact of FDI explaining on average 11% of wage inequality. D

One of the basic tenets of UK industrial policy, that attracting inward investment into the UK stimulates domestic productivity growth, is examined. A model of productivity growth is developed for the indigenous sector of UK manufacturing, linking domestic productivity growth to theoretical explanations of inward investment. The paper demonstrates that inward investment does stimulate productivity growth in the domestic sector of around 0.75 per cent per annum. However, this cannot be attributed to investment or output spillovers, but is a result of the productivity advantage exhibited by the foreign ¢rms.

Recent theoretical work points to the possibility of foreign direct investment motivated not by ‘ownership’ advantages which may be exploited by a multinational enterprise but by the desire to access the superior technology of a host nation through direct investment. To be successful, technology sourcing foreign direct investment hinges crucially on the existence of domestic‐to‐foreign technological externalities within the host country. We test empirically for the existence of such ‘reverse spillover’ effects for a panel of UK manufacturing industries. The results demonstrate that technology generated by the domestic sector spills over to foreign multinational enterprises, but that this effect is restricted to relatively research and development intensive sectors. There is also evidence that these spillover effects are affected by the spatial concentration of industry, and that learning‐by‐doing effects are restricted to sectors in which technology sourcing is unlikely to be a motivating influence.

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A B S T R A C TThe purpose of this paper is to examine the determinants of a firm's strategy to invest in a conflict location. To the best of our knowledge, this has not been done before. We examine this using a standard model of international business, overlaid with the fundamental approach to corporate social responsibility. We start with the population of multinationals who have chosen to invest in low income countries with weak institutions. We then split this sample in order to distinguish between firms that have invested in conflict regions compared to those that haven't. Our analysis then proceeds to explain the decision of those firms to invest in conflict locations by using a simple Probit model. We find that countries with weaker institutions and less concern about corporate social responsibility (CSR) are more likely to invest in conflict regions. Finally, firms with more concentrated ownership are more likely to invest in such locations.