I investigate the behaviour of multinational firms in UK manufacturing and business service sectors. I differentiate between UK multinationals that make outward investments in relatively low-wage economies versus those that do not, and between their activities in highskill versus low-skill industries in the UK. UK multinationals that invest in low-wage economies typically also invest in a large number of high-wage economies. I find some evidence that these firms display lower employment growth than other types of firm, in particular in low-skill UK industries, consistent with labour in relatively low-wage economies being a substitute for labour in relatively low-skill industries in the UK. But in high-skill manufacturing industries establishments owned by UK multinationals that invest in low-wage economies are among the largest and most productive. However, my findings suggest that this is not a result of overseas investment, but rather that only the most productive firms can bear the costs of investing in numerous locations abroad.

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