Foreign Direct Investment and Soft Power: How U.S. Leadership Impacts Foreign Investment in the United States
Wise, Andrew S
Since 2006, the United States has been the world’s largest recipient of foreign direct investment (“FDI”). However, the United States experienced a 40 percent decrease in FDI inflow from 2016 to 2017, coinciding with the change in administration in Washington. This paper looks at the effects of the United States’ soft power on FDI inflows to the United States. To quantify soft power, I use a Gallup survey in which participants in over 157 countries were asked whether they “approve or disapprove of the leadership of” the United States. Using panel data by host country from 2006 to 2017, I estimate OLS and fixed effects models and find that there is likely a significant positive relationship between FDI and soft power. While my models have limitations and more analysis is warranted, I conclude that FDI inflows to the United States increase as a host country’s opinion of U.S. leadership increases.
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Foreign Direct Investment from Developing Countries and Its Implications for Domestic Investment Rates Fu, Siming (Georgetown University, 2016)Developing countries are becoming important contributors, not only recipients, of global foreign direct investment (FDI) flow. In 2000, only 8.7 percent of global outward FDI was originated from emerging markets; however, ...