Foreign Direct Investment in Industrial R&D and Exchange Rate Uncertainty in the UK
نویسندگان
چکیده
The purpose of this paper is to investigate the role of exchange rate uncertainty in determining foreign direct R&D investment into the UK. We estimate an econometric model of FDI in R&D, using a panel of manufacturing industries. Our results suggest that an increase in the volatility of the euro-dollar exchange rate tends to relocate R&D investment from the Euro Area into the UK. A rise in the covariance of the Euro and sterling, which would be a certain consequence of the UKs entry into the European Monetary Union, will increase foreign direct R&D investment into the UK. JEL classification: F31, L6, L16
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