This paper examines the evolution since 1969 of the industrial structure of local technological development by US-owned multinational enterprises (MNEs) in the UK, by comparison with UK-owned MNEs in the US. The data used are the patents granted in the US to the largest US-owned and UK-owned firms, organised by the principal industry of the firm and the original location of the innovative facility responsible for each patented invention. The evidence illustrates the effect of a shift towards internationally integrated strategies for corporate technological development. In each case the local innovation of MNEs has moved closer to the industries of host country technological advantage, and hence to utilising location-specific capabilities as a source of competitive advantage in the MNE. We interpret this as a shift from an asset-exploiting towards an asset-augmenting form of foreign direct investment (fdi).
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