Chinese Versus US Investment and Influence among Citizens in Africa

Abstract

Scholars anticipate that foreign direct investment (FDI) results in greater influence abroad, but the influence that local citizens assign to foreign powers as a result of those investments remains an understudied channel of influence. This study examines how a foreign power’s FDI affects both its own resonance among local citizens and the influence those citizens assign to a competing power. Using a unique dataset of over 750 geolocated Chinese and US FDI projects in 23 countries in Africa and connecting those projects to survey responses from over 35,000 citizens, we demonstrate that citizen-assigned influence approximates a zero-sum game: in proximity to foreign investment projects, residents extend greater influence to the FDI-sending country and less to its major competitor. The results are driven largely by service sector projects, suggesting a prominent role for the visible goods, services, and opportunities that citizens notice and experience around them. Importantly, however, the influence that countries derive from their firms’ overseas investments in Africa cannot be likened to greater affinity: proximity to Chinese and US FDI projects decreases rather than increases citizens’ preferences for the respective country’s development approach, even as it increases their influence.