There is a general assumption in much of the literature on FDI that foreign owned plants have higher productivity. The purpose of this paper is to answer the important question: Are foreign owned plants better?''. Using U.K. manufacturing data over the period 1974–1995, our results provide robust empirical support for the view that in general, they are. This is of policy relevance in that it provides a clear rationale for support programmes aimed at attracting FDI for the direct benefits that it brings. It also highlights hindrances that may face inward investors, particularly cultural barriers.