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Voting with their Money: Brexit and Outward Investment by UK Firms

Breinlich, Holger, Leromain, Elsa, Novy, Dennis and Sampson, Thomas (2020) Voting with their Money: Brexit and Outward Investment by UK Firms European Economic Review, 124, 103400. pp. 1-20.

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We study the impact of the 2016 Brexit referendum on UK foreign direct investment. Using the synthetic control method to construct appropriate counterfactuals, we show that by March 2019 the Leave vote had led to a 17% increase in the number of UK outward investment transactions in the remaining EU27 member states, whereas transactions in non-EU OECD countries were unaffected. These results support the hypothesis that UK companies have been setting up European subsidiaries to retain access to the EU market after Brexit. At the same time, we �nd that the number of EU27 investment projects in the UK has declined by around 9%, illustrating that being a smaller economy than the EU leaves the UK more exposed to the costs of economic disintegration.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
Leromain, Elsa
Novy, Dennis
Sampson, Thomas
Date : 15 February 2020
DOI : 10.1016/j.euroecorev.2020.103400
Copyright Disclaimer : ©2020 The Authors. Published by Elsevier B.V
Uncontrolled Keywords : Brexit, Foreign Direct Investment, Synthetic Control Method
Depositing User : James Marshall
Date Deposited : 06 Feb 2020 14:32
Last Modified : 13 Mar 2020 15:35

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