Overseas direct investment in the UK economy is of substantial and growing importance. Overseas direct investment in Britain had a net book value of over £106bn in 1990, having grown from a total of under £18bn in 1978. Foreign owned enterprises operating in the British economy provide an estimated 13% of all manufacturing employment, 19% of net output and just over 20% of net capital expenditure. Between 1951 and 1990 over 35% of total US and Japanese investment in the European Community was sited within the UK. In 1990 a total of 350 projects were announced by foreign owned companies in the UK, with over 60,000 associated long term jobs. At a national level the success of the UK in attracting high levels of new foreign inward investment may be explained by a number of market and cost related variables. Access to the wider EC is important, but the UK itself is also a major market. The UK generally has lower relative unit labour costs than many of its EC neighbours. The UK has a relatively low profit tax rate and no controls on profit repatriation. Added to this can be generous incentives for foreign investors to locate in specified development areas. At a regional level there is keen competition to attract internationally mobile capital investment projects. During the 1980's both Wales and Scotland were amongst the keenest competitors. In comparing performance. Young (1989) concluded that whilst Wales had edged ahead in terms of numbers of inward investors (and associated jobs) being attracted, Scotland was leading in terms of the quality of investment. This paper re-examines the performance situation in the light of more recent data and empirical investigations.
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