How’s this for a front-page headline? "Foreign
Owners May Be Secret of U.K.’s Success" is the first thing you see
when you look at the dead-tree WSJ this morning; the headline on the jump is
"Foreign Owners Spur U.K. Revival". You’d never guess that two-thirds
of the way in to the 2500-word story there’s actually a long caveat, which explains
that although foreign investors are good at injecting money during the bull
years, they’re also more likely to protect their domestic operations during
bad times, with foreign plants the first to be culled. Plus, of course, senior
management positions are valuable things, and those are nearly always based
domestically rather than abroad.
I don’t want to sound too harsh, here: I think the WSJ gets the balance largely
right, even if the headline doesn’t exactly reflect the subtleties of the story.
I came to much the same conclusion
myself, using exactly the same Mini example as the WSJ uses, 18 months ago.
But in the comments to that blog entry, Lance Knobel struck an important cautionary
note:
In general I agree with your assertion that country of ownership shouldn’t
matter. But there is a significant amount of research showing it does matter.
Over time, high value-added activity tends to concentrate in country of ownership.
I suspect it’s easy to overstate how big of an issue this really is. Look at
the WSJ’s league table of UK companies acquired by foreigners, for instance,
and you see things like Shell being bought by Royal Dutch, or Allied Zurich
being bought by Zurich Allied. These are examples of corporate fiddling; they’re
not substantive changes. And I think there’s a limit to how much of the UK can
realistically be run from Reykyavik, no matter how many high-street chains are
bought up by Icelanders.