Reciprocity and Public Opposition to Foreign Direct Investment

Abstract

There is considerable evidence that the United States has imposed restrictions on foreign investments in response to other countries not providing reciprocal market access. It is unclear, however, whether the public supports basing investment policy on reciprocity. To explore this issue, we administered a series of conjoint and traditional survey experiments in the United States and China. Our experiments produced three important results. First, a lack of reciprocity does increase opposition to foreign acquisitions of domestic firms. Second, a lack of reciprocity produced a larger increase in opposition than the economic considerations we tested. Third, although our respondents were supportive of punishing countries with restrictive investment policies, they were less supportive of rewarding countries with open investment policies.