PUBLIC POLICY AND FOREIGN-BASED ENTERPRISES IN BRITAIN PRIOR TO THE SECOND WORLD WAR 1
This article examines the early evolution of British policy, prior to the Second World War. The British government adopted an ‘open’ policy towards foreign direct investment (FDI), despite periodic fears that some foreign acquisitions of UK firms in key sectors might be detrimental to the national interest, and a few ad hoc attempts to deal with particular instances of this kind. During the 1930s, when the inflow of foreign firms accelerated following Britain's adoption of general tariff protection, the government developed a sophisticated admissions policy, based on an assessment of the likely net benefit of each applicant to the British economy. Its limited regulatory powers were used to maximize the potential of immigrant firms for technology transfer, enhanced competition, industrial diversification, and employment creation (particularly in the depressed regions), while protecting British industries suffering from excess capacity.
1 We would like to thank Helen Mercer and two anonymous referees for their comments on earlier drafts of this article. Thanks are also due to the staff of the Bank of England Archive, Economic and Social Research Council (ESRC) Data Archive, and the Public Record Office for their help with our research. Any errors are our own.