LOCAL SOURCING BY MULTINATIONAL ENTERPRISE PLANTS Evidence from the UK Regions and its Policy Implications MIKE CRONE NORTHERN IRELAND ECONOMIC RESEARCH CENTRE

Acknowledgements I would like to thank the various company managers who participated in the surveys of Yorkshire & Humberside and Northern Ireland. Abstract Multinational enterprises occupy a prominent position in most UK regional economies. The contribution of these firms to employment and growth in the host region will be enhanced if they purchase material inputs from local firms ('local sourcing'). This paper presents new empirical evidence on local sourcing by multinational enterprise plants in two UK regions (Yorkshire & Humberside and Northern Ireland) and compares this with evidence from recent studies of other UK regions. The proportion of material inputs sourced locally is generally quite low in both regions and is broadly in line with that observed elsewhere. The paper then examines the scope for increasing the level of local sourcing through policy intervention and considers of the suitability of various policy models for the UK regions. A number of obstacles to greater local sourcing are identified including local unavailability, the sourcing strategies of multinationals, and the capabilities of local suppliers. The scope for policy intervention, it is argued, is quite limited but supplier development policies designed to tackle issues of supplier capacity and competitiveness have greater potential than simple 'brokering' services.