Globalization has always promised bringing growth and stability for developing regions. Nonetheless, in recent times, increasing inequalities, protests, autocratic backlashes, and rising frustrations with governments all over the place have led scholars and policy makers to question: Why do we experience social and political tensions as globalization and economic integration intensify? Is international economic interaction really leading to higher development and well-being of workers, or does this represent a neo-classical myth-obscuring reality? Understanding the role of international investments in growth and inequality processes is of fundamental interest to policy-makers, international organizations, and politicians. However, until now, international political economy (IPE) scholars have not presented a conclusive answer about the effect of Foreign Direct Investment (FDI) on those phenomena. This inconclusiveness is caused by methodological uncertainties, varying model specifications, and - as I argue - the discrepancy between the national and the local level of analysis. While many IPE scholars have focused on aggregated data, recent empirical work shows that local industry is decisive to understanding development mechanisms. My research aims to better assess the socio-economic consequences induced by FDI in developing countries by applying unique methods and rarely used granular investment data.
In my dissertation project “Marginal Effects of FDI on (Dis-)Satisfaction with Government: Duration, Distance, and Education”, I examine political and socio-economic consequences of FDI, which makes up to 5% of national GDP and has increased immensely over the course of the past decades. I do so at the national, regional, and the local level. Because FDI creates jobs directly at the place where it is invested and due to limited mobility, the main beneficiaries from FDI projects are situated in close geographical proximity to the investment. Thus, growth effects and distributional consequences between high- and low-skilled workers should be higher the closer people live to the FDI location, which has crucial implications for the economic well-being, distribution of wealth, and (dis)satisfaction with local and national governments. In contrast to most of the existing literature, I examine spatial and geo-referenced FDI data to model marginal growth and inequality effects in local industries, and aim to understand if FDI is not only creating socio-economic consequences, but also leading to frustration and (dis)satisfaction with government. My dissertation is supervised by professors Tim Büthe (TUM), Erica Owen (Pittsburgh), and Amy Pond (TUM), and has passed the PhD proposal defense in January 2021.