What drives opposition to foreign direct investment?

Peter Enderwick, Auckland University of Technology

Abstract: The recent growth of Chinese OFDI has attracted significant controversy and both political and public opposition. This paper analyses a secondary case study of Chinese OFDI in the New Zealand dairy industry to help understand the characteristics of FDI projects that are likely to face opposition. The case reveals that Chinese investors appear to face tougher hurdles in gaining approval than other foreign investors or domestic buyers. Ad hoc policy responses to Chinese investment have created uncertainty and a lack of transparency in host country approval processes that are hindering further investment. The discussion reveals a number of factors influencing acceptance of foreign investment that have not attracted a great deal of previous research attention including past investment experience, the effectiveness of opposition, and industry importance. The analysis confirms the view that opposition results from both locational and firm characteristics. Chinese investors need to make the strongest possible case to demonstrate economic benefits, but can expect opposition and more stringent approval conditions than other investors. Foreign investment approval regimes need to be able to accommodate the growing volume and forms of Chinese OFDI.

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