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Research by Professor Mark Casson and colleagues at the University of Reading demonstrated that the net benefits of inward investment to the UK economy had been systematically overstated by HM Treasury (HMT) up until 2007. The research findings overturned the Treasury's view that all foreign direct investment (FDI) by multinational enterprises (MNEs) was equally beneficial to the UK economy, and so equally merited special efforts to attract it. Instead the University of Reading research was able to show that UK-located SMEs would provide a bigger return to any subsidy either by increasing export sales, or by building stronger links within the supply chains of overseas MNEs. The research team's report led to a change in Government policy after 2007, with measures to attract FDI since that date being targeted only towards those types of investment which are most likely to unambiguously benefit the UK economy.
Thousands of poor rural workers from 11 island states in the Pacific have benefited from the findings of twin research programmes led by Alan Winters of the University of Sussex — one on small island economies and one on the temporary mobility of labour. New Zealand's Recognised Seasonal Employers Scheme (RSE), which welcomes workers from poor Pacific Islands for the agricultural season, is a direct outcome of his research. Winters was also instrumental in designing and implementing the RSE in a way that permitted formal evaluation and which has become an exemplar of good practice. The evaluation shows that households in Vanuatu and Tonga benefiting from the scheme have experienced average increases in income of 35-40 per cent.
The RSE has been described by World Bank staff as `among the most effective development projects ever evaluated'. Persuaded by the positive evaluation, the Australian government has overcome longstanding reservations and introduced a nearly identical scheme, which is potentially much larger. The RSE also inspired the imaginative US response to the 2010 earthquake in Haiti, providing 1,000 temporary visas for unskilled Haitian workers. And Winters' research on temporary labour mobility and the RSE underpins developing countries' efforts to start serious negotiations on the issue in the WTO's Doha Round of trade negotiations.
Chang's research has covered a wide range of public policy, including industrial policy, trade policy, privatisation, and agricultural policy, as well as theories of state intervention. By successfully challenging the then prevailing orthodoxy on economic development, his research has had significant influence on the actions of many national governments, multilateral institutions (e.g., the UN, the World Bank) and NGOs (e.g., Oxfam). Chang's research has also had substantial impact on public debate concerning economic policies, especially but not exclusively those regarding development issues. He has had two best-selling mass-market books (together sold 1.15 million copies as of December 2012) and gained worldwide media exposure for his views.
University of Reading Professors have developed innovative theory of how Multinational Enterprises (MNEs) interact with different policy environments that has informed funding policy for research and innovation in the European Union and beyond. This work has led to the growing recognition of two policy dilemmas facing many countries' attempts to subsidise R&D activities, and their attempts to counter what was originally seen as the threat of the `hollowing out' of R&D activities to low-wage nations. Initially, Professor Rajneesh Narula identified how MNEs were reluctant to invest in R&D without a stable industrial policy. But a stable policy environment inevitably contained the potential for incumbents to gain privileged access to government support, which could disadvantage smaller firms in emerging, high technology sectors. This could result in such high-growth firms relocating from their home countries to more supportive environments overseas, with consequent negative impact on the economic well-being of the home country. Narula also recognised that as R&D activity in individual countries became more mature and more specialised, so firms would relocate some R&D activities to be closer to their ideal collaborators, many of which might be overseas. This relocation of R&D activities was, once again, not `hollowing out', but a response to increasing specialisation of R&D.
In the first instance, the appropriate policy response to the apparent threat of `hollowing out' of MNEs was for governments to invest more in subsidising R&D activities overall. In the second, it was to encourage a wider co-operation policy encompassing all forms of international research collaboration.
These ideas were incorporated into the EUs new Framework Programme for Research and Innovation — Horizon 2020 - where the focus on international collaboration beyond the EU represents a very significant departure from past EU practice. This is directly attributable to Narula's research.
Professors of Economic History Steven Broadberry and Nicholas Crafts benchmarked historical British productivity performance against other modern economies and determined the factors which most influenced productivity growth, highlighting the important roles played by supply-side policies including education, innovation, competition, and labour relations policies. Their research has impacted both public and policymaker understanding of pro-growth responses the current government could make to the 2008 financial crisis. Their findings underpinned many Thatcher government policies and supported the retention of these policies by governments that followed.
Monetary policy and its effect on the wider economy are important for South Africa's objective of achieving both high economic growth and low inflation — which are deemed to contribute to the government's and electorate's greater objectives of reducing poverty and creating employment. The central bank (South African Reserve Bank, SARB) and the National Treasury have responsibility for both monetary policy and the oversight of the financial sector. Laurence Harris's research on the links between monetary policy, financial sector development, and their connection with the financing and investment decisions made by businesses has led both institutions to seek and act on his advice.
Aston's research on inward investment has had considerable reach and significance, improving economic policy analysis on the effects of foreign direct investment (FDI). The research has:
Research by Surrey's Centre for International Macroeconomic Studies (CIMS) has had significant impact on monetary policy in several emerging economies.
This case study highlights impact in Nigeria and Pakistan. Both are important emerging economies: Nigeria is the second largest economy in Africa and ranks 30th by world GDP (adjusted for purchasing power parity), while Pakistan ranks 27th; yet GDP per capita is relatively low in both.
Since 2008, Surrey research has: (1) led to the establishment of a new Centre for Survey Research at the State Bank of Pakistan, collecting data that have directly influenced the Bank's monetary policy; (2) steered reform of the macroeconomic models used by the State Bank and the Central Bank of Nigeria; and (3) helped develop a new approach to monetary policy Nigeria.
A series of empirical research studies, underpinned by economic theory, explored enterprise support and urban settlement structure. The research contributed significantly to the evidence base used by East Midlands Development Agency (EMDA) in developing their Regional Economic Strategy (RES), and was key in shaping two of the Strategic Priorities. More generally, the research-based recommendations informed EMDA policy development, in particular, the £290 million Single Programme investment set out in the RES. The research also helped shape county councils' support for enterprise, innovation and business. More recently, the research has informed the shape of regional economic development beyond the regional development agencies into new government policy through the new Local Enterprise Partnerships; for example Lincolnshire's £14 million investment in broadband.
Bradford research led to the development of the Foreign Direct Investment (FDI) model which fed into the formulation of international policy tools: namely the Principles for Responsible Agricultural Investment (PRAI) and the Indicators for Measuring and Maximizing Economic Value Added and Job Creation from Private Investment in Specific Value Chains (IMMEV). PRAI was adopted by the Group of 20 (G20) Finance Ministers and Central Bank Governors in 2010 and is currently in use to determine relevant national policies aiming to attract investment in agriculture, in Africa and South East Asia. IMMEV is used to support the Development Pillar of G20 and its use is currently implemented in six countries (Bangladesh, Cambodia, Dominican Republic, Laos, Mongolia and Mozambique).