Inward foreign direct investment and constitutional change in Scotland

Young, S., Ross, D. and MacKay, B. (2014) Inward foreign direct investment and constitutional change in Scotland. Multinational Business Review, 22(2), pp. 118-138. (doi:10.1108/MBR-04-2014-0016)

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Abstract

Purpose - To undertake an analysis of the implications of potential Scottish independence for inward foreign direct investment (FDI), multinational enterprise strategies, and the local economy.

Design/methodology/approach - Takes a multidisciplinary approach drawing upon literature and evidence in the international business and management, political economy, and economic geography fields to analyze the role and impact of inward FDI in Scotland following possible Scottish independence.

Findings - Scotland continues as an attractive location for FDI, with greater diversity than hitherto. While the country’s comparative advantages in immobile natural resources provide some protection from uncertainty, weak embeddedness is a risk factor irrespective of independence. A range of transition costs of independence are identified, which could be high and of indeterminate duration, and some will be sector-specific. There are also new possibilities for tailoring of policies, and potential reindustrialization opportunities in renewable technologies. The foreign investors most vulnerable to political risks and uncertainties are those whose market scope is the rest of the UK (rUK) either as exporters or value chain integrators, in addition to the high political risk industries of energy, banking, and financial services and defence. Scottish subsidiaries’ significance within their parent MNE groups will also be a major factor in determining responses to political risks and uncertainties.

Originality/value - Specific focus upon the impact of potential independence on the foreign-owned sector as a major contributor to the Scottish economy.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Young, Professor Stephen and Ross, Dr Duncan
Authors: Young, S., Ross, D., and MacKay, B.
College/School:College of Social Sciences > Adam Smith Business School > Management
College of Social Sciences > School of Social and Political Sciences > Economic and Social History
Journal Name:Multinational Business Review
Publisher:Emerald Group Publishing Ltd.
ISSN:1525-383X
Copyright Holders:Copyright © 2014 Emerald
First Published:First published in Multinational Business Review 22(2):118-138
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher.

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