Greenfield FDI is significantly more popular than foreign acquisitions of domestic firms, newly-released data from the Pew Research Center has found.
The public opinion survey, which was conducted in 15 countries in 2019, found that 72% of respondents saw foreign companies building factories in their country as a good thing, while only 40% said the same of foreign companies buying domestic firms.
Kat Devlin, a research associate at Pew Research Center and one of the authors of the study, told fDi that “we don’t know exactly why people are more supportive of greenfield investment than foreign acquisitions,” but previous studies showed similar results.
She suggested that greenfield investments “can mean new jobs and greater economic activity,” while foreign acquisitions “can mean new management, a new business culture and possible company consolidation with attendant job losses.”
The greatest gap was found in Nigeria, where 89% of respondents reacted positively to greenfield investment but only 38% supported foreign acquisitions. Tunisia and South Korea also saw large gaps.
A smaller gap was found in Israel, where both greenfield investment and foreign acquisitions were viewed positively, with 83% and 60% approval. Indonesia also had a small gap, with only 44% and 28% approval.
The survey also found that support for FDI has declined in many countries since 2014, when Pew last conducted a similar survey. Support for greenfield FDI declined by double digits in three countries between 2014 and 2019, and support for foreign acquisitions declined by double digits in eight countries in the same period.
When asked about this trend, Ms Devlin told fDi that “views of the economy overall may play a role in some countries, but again it is not consistent across nations.” She pointed out that Nigeria, Brazil, and Turkey have all seen declining approval for FDI amidst economic declines, while Indonesia and the Philippines also saw declining approval despite economic gains.
The falling popularity of FDI is increasingly mirrored in public policy, as dozens of governments around the world have recently tightened restrictions on foreign acquisitions in response to the Covid-19 pandemic and concerns about the growing influence of Chinese investors.
In June, the UK reformed the 2002 Enterprise Act to enable the government to intervene in attempts by foreign firms to acquire British companies involved in the Covid-19 response, following similar laws in Japan and EU countries.
Less than three weeks earlier, Australia tightened its own foreign investment review framework to empower the government to reject investments deemed national security risks, while India and the EU both moved to restrict acquisitions by Chinese companies.
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