Global Research Series - Inbok Rhee KDI

“To Stay Or To Go?”: The Sources Of Domestic Support For Foreign Direct Investment In Kenya

When and why do citizens support or oppose foreign direct investment (FDI) policy in developing countries?

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FDI flows are the single largest source of global capital flows and are considered a conduit for employment generation and transfer of technology with great potential to foster economic growth. Despite these potential benefits, many studies find negative impact of FDI inflows due to factors such as increase in inequality, corruption, or environmental degradation, and some even document the surge of protest over FDI policies.

While most existing studies predominantly focus on the supply side of FDI policies, study on the public demand for FDI is still in infancy. Using a series of original survey experiments in Kenya, this project considers when host country citizens prefer foreign versus domestic investments, and what characteristics make foreign direct investment more desirable to host country citizens.

Moreover, we also investigate when and from whom governments can claim credit for increased foreign investments. We find that host country citizens generally prefer foreign over domestic firms, and the concern for corruption seems minimal. While economic factors such as job creation or wage levels matter the most in determining public preference for FDI inflow, we also show that citizens put strong emphasis on social responsibility or minimal policy concessions. Finally, we find that elected politicians can credit claim even when they are clearly not attributable for increased FDI inflows, but such effect is only detectable for coethnic voters. 

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Meeting ID: 851 1565 8663
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For further enquiries, contact Adam Tyson: a.d.tyson@leeds.ac.uk