The London Experiment - An Econometric Approach to Assessing Foreign Direct Investment

The research question of this book is to prove the hypothesis of Bradley and Fitzgerald (1990) that '' [an] analysis of FDI [consists of] necessary component[s] of the integration of [...] multinational enterprises [...] ''. The aim is to firstly specify, estimate and eventually evaluate a technical model of Foreign Direct Investment (FDI) inflows to the United Kingdom (UK) on the example of the financial service field in London between 1985 and 2010. In doing so, this research problem is approached in an incremental and deductive way because the theoretical research findings are empirically applied to the financial service area in London. First of all, the paper justifies the relevance and international trends of FDI globally and for the UK. The next section shifts from a macro to micro perspective where the focus lies on FDI inflows to the financial service sector in London. In this regard, some exemplary and specific determinants of FDI are assessed through the lenses of an econometric model. Ultimately, based on the correct technical model, a possible outlook is given in order to emphasize some expectations for the future development.