The Impact of Brexit on FDI in the UK

Bucks New University

BM631 Research

Title

The impact of Brexit on the FDI in the UK

Name of the student: Alexandru Teofil Comarita

ID - 220146221

Assessor`s name – Dr Palto Datta

Module BM634 - Dissertation

Chapter 1: Introduction

1.1 Background of research topic

Foreign direct investment is the cross-border investment in which the investors from one country invest in the foreign countries. FDI supports enhancing the productivity of the organisations and promotes growth and development of the businesses. UK receives the highest FDI after the United States and China and the flexible labour markets, technological development; highly educated and skilled workforce helps in attracting FDI in the UK (Othman et al., 2019). The UK is amongst the major attraction of FDI in Europe and there are various determinants that attract investment in the country. The availability of a skilled and highly educated workforce helps in attracting the companies to invest in the UK and the infrastructure and innovation and technological development in the country are also among the major attraction for foreign direct investment in the UK. Brexit in the UK has created uncertainties in the market and it is likely to have an impact on the FDI in the country (Othman et al., 2019).

FDI majorly contributes to the overall economic growth of the country, it increases jobs opportunities for the people in the country and reduces the unemployment rate in the country. Increased employment opportunities help in enhancing the income level of the people and it also increases the purchasing power of the customers (Islam et al., 2020). The FDI promotes technological development in the companies and also leads to human resource development. FDI increases exports, improves capital growth, and contributes to the overall development of the economy. FDI is important for economic growth and maintaining stability in the country. The government of the different countries also provides incentives and uses different strategies for attracting FDI in the country for promoting economic growth and providing better employment opportunities to the people in the country (Islam et al., 2020).

Brexit in the UK is the departure of the UK from the European Union. Due to Brexit, various businesses have moved their headquarters to the European Union. It has created uncertainties in the market for the outcomes and it has slowed the economic growth of the country. Due to Brexit, the price of the pound fell that increasing the prices of exports. Brexit has created labour shortages in the country and it is creating challenges for the companies in the country. The UK has to develop new trade agreements with the other countries and there are various changes in the country due to Brexit (Tetlow and Stojanovic, 2018).

With the other changes in the country, Brexit will also have a significant impact on Foreign Direct Investment. The research aims to analyse the impact of Brexit on Foreign Direct Investment in the UK. It will help in identifying the future implication of Brexit on the FDI in the UK. The report will focus on identifying the relationship between Brexit and Foreign Direct Investment and will help in identifying its impact on the businesses in the UK (Dhingra et al., 2016).

1.2 Research rationale

The United Kingdom is the major attracting for foreign investment in the entire report and according to a report of the UK the FDI stock is valued at an estimated £1Trillion. FDI is promoting consistent economic growth in the country and it is important to identify how Brexit in the UK will impact FDI in the country. The report will focus on identifying the current and future impact of Brexit on FDI in the country and it help in identifying the future outcomes. The research will focus on identifying the determinants that attract investment in the country. The negative impact of Brexit on FDI will impact the economic growth in the country (Kristjánsdóttir and Karlsdóttir 2020).

Brexit in the UK has impacted the economic conditions in the country and has created various challenges for businesses. Brexit in the UK has created uncertainties in the market and there are different perceptions of the people related to its outcomes. The report focuses on identifying the positive and negative impact of Brexit on the UK (Welfens and Baier, 2018). Through the research, the relation between Brexit and FDI will also be identified and it will help in identifying the impact of Brexit on FDI in the UK. There is no prior research conducted on identifying the impact of Brexit on Foreign Direct Investment in the UK and identifying its future implications on the country and the current report will focus on fulfilling the research gap.

It is important to identify how Brexit in the UK will impact FDI and the economic growth of the country. The report focuses on identifying the future implications of Brexit on Foreign Direct Investment. It will help in identifying the long-term implications of Brexit on the country and will help in determining its impact on the businesses of the UK.

1.3 Research questions

1. How does Brexit impact the different businesses in the UK?

2. What are the future implications of Brexit on Foreign Direct Investment in the UK?

1.4 Research aims and objectives

Aim

The research aim to analyse the impact of Brexit on Foreign Direct Investment in the UK

Objectives

1. To identify the relationship between Foreign Direct Investment and Brexit

2. To identify the impact of Brexit on the businesses

3. To identify the determinants of Foreign Direct Investment within the UK

4. To analyse the future implications of Brexit on Foreign Direct Investment

Through the analysis, it has been identified that Foreign Direct Investment is essential for the economic growth of the country and there are various determinants that attract investment in the country. The Brexit in the UK has created various uncertainties for businesses and investors and it has impacted FDI in the country. Through further analysis and research, the impact of Brexit on FDI and the businesses of the UK will be identified. The research will focus on identifying the future implications of Brexit on FDI in the country. Further research will be conducted by collecting data from primary and secondary sources. The primary and secondary sources will help in collecting relevant information for the research and will help in achieving the research objectives.

References-

Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J. (2016). The impact of Brexit on foreign investment in the UK. BREXIT 2016, 24(2), pp.1-10.

Islam, M.A., Khan, M.A., Popp, J., Sroka, W. and Oláh, J. (2020). Financial development and foreign direct investment—The moderating role of quality institutions. Sustainability, 12(9), p.3556.

Kristjánsdóttir, H. and Karlsdóttir, F.B. (2020). UK foreign direct investment in the oecd, culture, and geography. Baltic Journal of Economic Studies, 6(5), pp.8-14.

Othman, B.J., Al-Kake, F., Diah, M.L.M., Othman, B., Hussein, S. and Hasan, N.M. (2019). Impact of foreign direct investment on the economy of the United Kingdom. International Journal of Psychosocial Rehabilitation, 23(02).

Tetlow, G. and Stojanovic, A. (2018). Understanding the economic impact of Brexit. Institute for government, pp.2-76.

Welfens, P.J. and Baier, F.J. (2018). BREXIT and foreign direct investment: Key issues and new empirical findings. International Journal of Financial Studies, 6(2), p.46.