ABSTRACT
This chapter examines the influence of Britain's increasingly protectionist trading regime in stimulating this foreign direct investment (fdi) into Britain, and assesses the economic impact of tariff-induced inward investment. The stimulus to fdi induced by protectionism is shown to have exerted a positive influence on the British economy, especially in the long-term. Most other industrialised nations embraced protectionism much more rapidly and completely than Britain. In addition to the growth of tariffs, Britain's continued openness to overseas enterprises provided a further attraction for foreign multinationals. Following the 1931 economic crisis the new National Government undertook two actions which, together, had a profound effect on the flow of foreign-based enterprises to Britain: taking sterling off the gold standard, and moving towards comprehensive protectionism.
