UK Sold to Foreigners

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.