Individual Preferences for FDI in Developing Countries: Experimental Evidence from China

Abstract

AbstractForeign direct investment (FDI) into developing countries such as India and China is often met with domestic backlash by the citizens of the host country, and backlash in the form of protests and other disruptive behavior has increased the salience of public opinion in FDI policy. As one of the first survey experiments assessing Chinese citizens’ attitudes toward FDI, this paper adopts a novel conjoint design to evaluate the impact, in the present project, of individual respondent characteristics and specific FDI features on respondents’ preferences. Importantly, we find that low-skilled respondents are not necessarily more likely to support labor-intensive FDI, a result that challenges the conventional wisdom that individuals in developing countries abundantly endowed with labor should be more likely to support low-skilled FDI. Instead, citizens are more concerned about FDI projects’ country of origin and impact on the local job market when forming their preferences.