Citation:
Andrew Burke, Holger Görg and Aoife Hanley,
The impact of foreign direct investment on new firm survival in the UK: evidence for static versus dynamic industries, Small Business Economics, 2008, Volume 31, Number 4, Pages 395-407
Abstract:
The paper examines the impact of Foreign Direct Investment (FDI) on the survival
of business start-ups. FDI has potential for both negative displacement/
competition effects as well as positive knowledge spillover and linkage effects
on new ventures. We find a net positive effect for the whole dataset. However, a
major contribution of the paper is to outline and test an argument that this
effect is likely to be comprised of a net negative effect in dynamic industries
(high churn: firm entry plus exit relative to the stock of firms) alongside a
net positive effect in static (low churn) industries. We find evidence to
support this view. The results identify new effects of globalisation on
enterprise development with associated challenges for industrial policy.
