An investigation into whether the Euro has had an effect upon foreign direct investment received by the UK.

Abstract

This study looks at whether the introduction of the euro has had any effect upon FDI flows received by the UK, and in particular whether effects are more noticeable in the longer-run compared to the short-run, The specification used in this study is adapted from the one used by Petroulas (2004) and is concerned about finding the effects of a monetary union upon FDI flows and takes account of the time effects that are expected to be present. A critical review of the literature concerning monetary union effects upon FDI is discussed as well as a review of research methodology and associated empirical methodology. Finally the main results are analysed where it is found that the limitations of our data, do not allow us to make a firm evaluation of whether the euro has had an effect upon FDI flows received by the UK. The last section concludes.