The second essay in my dissertation, “Foreign Investment and Perceptions of Government Performance: Evidence from Latin America,” examines how the location and characteristics of FDI affect how citizens perceive government management of the economy across ten Latin American countries. I examine the local effects of FDI by using a highly detailed but under-utilized dataset on FDI, which contains micro-level data on the economic attributes and geographic locations of FDI projects. I then use public opinion data to empirically test how perceptions of the government shift depending on the amount and characteristics of foreign investment. I match the region of the investment with the region of the respondent, which allows me to capture the heterogeneity in foreign investment, including the sector of the investment as well as how many jobs and how much capital investment it brings.
The paper’s main theoretical prediction is that the individuals in regions with the most job creation and capital investment from FDI are those that should have the most positive assessment of government performance. The results indicate that, counter-intuitively, FDI does not always lead to an improved assessment of government performance: investment and jobs creation in particular sectors, particularly the extractive industries, can lead to worse perceptions of government performance. Moreover, my findings suggest that FDI may be a better predictor of perceptions of government performance than either national economic indicators or individual-level survey-respondent characteristics.
