Overseas Investment as Soft Power? Chinese and U.S. FDI in Africa
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Abstract: Scholars increasingly interpret overseas investment as a form of economic soft power, swaying local public opinion to favor the investing firm’s home country. Conceptualizing soft power as a function of both influence and affinity, this study examines how citizens react when firms from major foreign powers – and from their prominent rival – invest locally. Using a unique dataset of over 750 geolocated Chinese and US FDI projects in 23 countries in Africa and connecting those projects to survey responses from over 37,000 citizens, we demonstrate that citizens assign greater influence to major powers whose firms invest locally and reduce the influence they extend to the major power’s rival. Importantly, however, the influence that countries derive from their firms’ overseas investments in Africa cannot be likened to greater affinity: proximity to Chinese and US foreign direct investment (FDI) projects decreases rather than increases citizens’ preferences for the respective country’s development approach, even as it increases their perceived influence. The findings suggest that investing powers are viewed more as heavy-handed bosses than supportive partners, and that FDI thus may not provide a straightforward path to soft power.
Co-sponsored by: the China and the World Program, the Weatherhead East Asian Institute, & the APEC Study Center at Columbia University.