Quitting globalization: trade-related job losses, nationalism, and resistance to FDI in the United States

Abstract

Existing research has found that American politicians benefit from trying to attract investment and creates jobs. In this paper, we build on this work by describing the drivers of Americans' attitudes toward inward foreign investment (FDI). We posit that foreign and Chinese investment are different than domestic investment in the public imagination and that nationalism and proximity to deindustrialization interact to shape public opinion about them. We propose and test two theories of this interaction using a survey experiment that randomizes whether a respondent is responding to a statement about “business investment,” “foreign business investment,” or “Chinese business investment”. We find that (1) Americans are skeptical of business investments by Chinese, and, to lesser degree, “foreign” firms; (2) the gap in enthusiasm for generic business investment and foreign/Chinese business investment rises with local trade-related job losses; and (3) the distinction between nationalists' and non-nationalists' attitudes toward FDI declines in local job losses.

Public opinion on U.S. investment in foreign countries: Survey evidence from 11 southern states in the United States

“…Interestingly, we found no evidence that respondents were biased against China or Mexico as destinations for U.S. FDI outflows. This is in contrast to the findings of previous studies focusing on FDI inflows such as Jensen and Lindstädt (2013) and Feng, Kerner, and Sumner (2021), which found that Americans had relatively unfavorable views of Chinese investment in the United States when compared to "foreign" investment from an unspecified country. Our null findings might be attributable to the relatively small sample size, and it is possible that a statistically significant bias against China could be detected with a larger sample.…”

“…Interestingly, several of our findings stand in contrast to the existing literature. First, unlike studies of Americans' perception of FDI inflows such as Jensen and Lindstädt (2013) and Feng, Kerner, and Sumner (2021), which showed that Americans' negative feelings toward certain countries strongly color their perception of FDI inflows from these countries, we did not find that FDI outflows to China and Mexico were more negatively perceived than FDI outflows to an unspecified "foreign" country.…”

“…While respondents viewed FDI inflows as good for their nation's economy if the investments were made by companies from favorably perceived countries (Germany and Japan), they were less likely to think so if the investments were made by companies from unfavorably perceived countries (Saudi Arabia and China). Similarly, Feng, Kerner, and Sumner (2021) found through a survey experiment that Americans are much more likely to think of investment as bad for the United States when the investment originates in China, as opposed to investment from an unspecified foreign country.…”

“…The literature on public attitudes toward FDI has been growing in recent years, particularly those regarding FDI inflows (Feng, Kerner, and Sumner, 2021; Jensen and Lindstädt, 2013; Li and Zeng, 2017; Zeng and Li, 2019). Jensen and Lindstädt (2013) implemented a survey experiment in the United States and the United Kingdom, through which they found a statistically significant difference in public opinion on the economic benefits of FDI inflows depending on the different nationalities of the investors.…”

The role of perceptions about trade and inequality in the backlash against globalization

“…Them" seeAllport (1954) andBremmer (2018), and the evidence inMutz and Kim (2017) on "in-group favoritism". The role of perceptions as to trade and income inequality also tie in with experimental studies byFeng et al (2021) according to which foreign, and especially Chinese, investment in the US is considered different than domestic investment.…”