[AN ANALYSIS AND CRITICAL EVALUATION OF THE EFFECTS OF THE PRESENCE OF SANTANDER AND THE SUBSEQUENT IMPACT OF FDI ON ASPECTS OF THE UK BANKING INDUSTRY]

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Acknowledgement

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DECLARATION

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Abstract

Foreign direct investment (FDI) into UK has increased dramatically since the inception of the North American Free Trade Agreement (NAFTA), raising questions about its effect on the UK economy. This paper studies the impact of FDI on industry productivity and wages over the first 10 years of NAFTA, paying particular attention to the source country and destination industry of investments. It also offers a detailed description of the evolution of FDI, its components, sectoral composition and sources from 1994-2005. There is evidence of a positive effect of FDI on productivity, particularly total factor productivity (TFP). The effect on wages is negative or zero at best, suggesting a divergence from productivity over this time period. The positive productivity effect stems largely from US FDI into non-maquiladora industries, which receive over two-thirds of manufacturing FDI. There is no evidence that more distant source countries have a differential effect. Consistent with theoretical expectations, FDI into maquiladoras benefits unskilled workers at the expense of skilled workers.Table of Content

Contents

CHAPTER 1: INTRODUCTIONVII

Background of the Studyvii

Rationale of the Studyxi

Purpose of the Studyxii

Significance of the Studyxii

CHAPTER 2: LITERATURE REVIEWXVI

Expansion in UKy, U.K. and Polandxxxvii

The share and the dividendxxxviii

High shareholder returnxxxviii

CHAPTER 3: METHODOLOGYLIII

Research Designliii

Qualitative Researchliii

Quantitative researchliii

Sampleliv

Data Collectionlv

Resultslviii

Empirical modellix

Explanatory variableslxii

Bank-level explanatory variableslxii

CHAPTER 5: CONCLUSIONLXVI

REFERENCELXVIII

Chapter 1: Introduction

IN recent years, foreign direct investment (FDI) flows have increased more than either world trade or world production. For numerous evolving nations, FDI has become an significant, if not the most significant source of external financing (UNCTAD, 2006). Driving not less than some of this boost has been a prevalent change in principles as nations have turned away from inward looking trade substitution to adopting trade and foreign investment. FDI in specific is advised beneficial not only because it adds in much required capital, but develops paid work and most likely assists to increased financial development as it presents get access to to sophisticated technologies and spillovers, technological or else (Borensztein et al., 1998; De Mello, 1999).

Despite the expanded relation significance of FDI, only a couple of nations have been recipients of considerable unconditional flows, amidst them China, Brazil and UK . The last cited has dynamically been seeking to appeal FDI since the 1980s, first by resting limits on foreign investment.1 However, these unilateral principles were not glimpsed as adequate as they were needing a firm promise effect. Thus, shortly then, UK chased the North American Free Trade Agreement (NAFTA) whose expressly asserted ...