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International Commercial Interests and Manufacturers’ IFDI Policy Preferences
Wu Qisheng(吴其胜)
Institute of International Relations, Shanghai Academy of Social Sciences, Shanghai, China
Abstract: Similar to the cross-border flow of commodities through trade, the global
allocation of capital and the globalization of manufacturing are also subject to important
domestic political influence. By increasing demand for production factors and supply of
products, the inflow of IFDI will increase competitive pressures facing manufacturers in the
host country. This effect is similar to the import of goods. As such, in the face of external
competitive pressures, the host country’s manufacturers will oppose the inflow of foreign capital
like they oppose the import of commodities unless restrictive measures are introduced. However,
as revealed by the analysis on the attitudes of US semiconductor, renewable energy and steel
manufacturers toward IFDI since the 1980s, whether or not the manufacturers of a host country
will call for restrictive or discriminatory policy against IFDI is largely influenced by the
magnitude of their commercial interests in the source country of investment. A major factor of
such influence is the potential reaction of the source country. Specifically, when a manufacturer
has significant commercial interests in the source country of investment, this manufacturer is
more likely to have an open policy preference toward direct investment from this country, and
vice versa.
Keywords: IFDI policy, international interests, manufacturers, IFDI policy preferences
JEL Classification Code: F23
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