At our recent Mershon Monday, Professor Freddy Chen presented findings from his ongoing collaborative research with Professor Jonathan Chu of the National University of Singapore, which sheds new light on how local officials across the United States evaluate foreign investment proposals in their communities.
Their research asks how do local policymakers approach foreign direct investment (FDI)? Scholars have typically emphasized national-level factors – such as macroeconomic policies and regulatory environments – and broad public opinion. Yet, as Chen and Chu argued, they often pay less attention to the “middle layer” of local decision-makers. Chen and Chu’s research challenges assumptions that local policymakers are driven purely by economic pragmatism. It emphasizes how local officials strategically balance local interests with broader geopolitical considerations. Their findings underscore the importance of understanding these grassroots perspectives to fully comprehend America’s approach to foreign investment and economic nationalism.
Chen and Chu partnered with CivicPulse, a nonprofit specializing in surveys of elected local policymakers, to conduct a nationwide survey between November 2023 and March 2024. Drawing from a comprehensive database of elected officials in towns with populations greater than 1,000, they collected responses from over 500 local policymakers. Their research uncovered a pronounced preference among local officials for American-owned firms—even when foreign firms promised to offer more substantial economic benefits. Policymakers consistently viewed Chinese companies with particular skepticism, frequently expressing concerns about government influence, surveillance risks, and national security threats. By contrast, they evaluated German and Japanese firms far more favorably, perceiving them as reliable democratic partners with established records of positively impacting local economies.
To illustrate local policymakers’ strategic thinking and active agency, Chen shared specific examples from various states. In Michigan, a shift in local leadership triggered backlash against Gotion, a Chinese-founded electric vehicle battery firm. Despite initial state-level support, the local township ultimately denied the company access to critical water resources, resulting in a lawsuit and exemplifying the significance of the local actors at the center of Chen and Chu’s research. Beyond obstructing foreign firms, local policymakers also actively court FDI. In major urban centers like Los Angeles, initiatives such as Global LA highlight efforts by city mayors to proactively attract international investment. Even smaller localities engage strategically. Pulaski County, Virginia, for example, sought to attract foreign investment by sending officials abroad to establish international relationships and promote local opportunities.
Mershon Monday Story by Postdoctoral Scholar Julia Marino, in collaboration with colleagues Helen Murphey and Nicholas Nyachega.