Populism and FDI Location Choice

Abstract

In this study, we investigate how populist governments influence the location choice of multinational enterprises (MNEs) in terms of foreign direct investment (FDI). We also examine how experience of MNEs acts as a contingency in this relationship. With a sample of 525,688 observations on FDIs from 2007 to 2019 we find that MNEs are less likely to invest in a country the more its government is considered populist. More internationally experienced firms that already have invested in the target country and that have experience with populist governments are less deterred from uncertainties of populist governments. Overall, our results highlight the specific uncertainties populist governments cause for MNEs’ location choice and that experienced MNEs can better deal with them.