The costs and benefits of inward investment: The case of Plymouth

Outline

Inward investment has long been regarded in the UK as the major method of restructuring the economies of depressed regions. The value of such investment has long been contentious. Those in favour argue that inward investment provides a number of benefits including the provision of good employment opportunities, diversification of local economies, demand for local raw materials, components and services, improved R & D and productivity and support of local communities. Those against tend to argue that inward investment provides the wrong sort of jobs in the wrong sort of production units and question whether many of the above alleged benefits are realised. This article examines these issues through a detailed analysis of the impact of inward investment in one city, Plymouth. The evidence suggests that the benefits of inward investment have been considerable though there have been some disadvantageous aspects. In any event, it is argued that there are no credible policy alternatives. What must be done is to increase the benefits by, for example, stipulating the local content of production.