Branch plant economy

It is not entirely evident who first used the ‘branch plant economy’ concept; however, it has been extensively used in Canadian and UK literature since the 1970s. This concept broadly describes the negative consequences on the growth of the regions whose economies are primarily composed of branch plants that belong to multi-plant firms. Since the position of branch plants within the command chain is low, the regions that host these branch plants tended to be remotely controlled by the plant headquarters, which are usually located distantly. Authors at that time thought that branch plants might create a short-term boom in the regional economies when initial investments were deployed, or when they performed well owing to external factors such as the sector’s expansion (e.g., the oil industry boom led to an economic boom in Aberdeen). That boom, however, did not sustain itself over the long term.