Popular Attitudes, Globalization, and Risk

Working Paper
04-2
August 2004

Popular opposition to globalization in a country can signal markets that the country in question poses greater investment risk. By integrating survey data from the Pew Global Attitudes project with information on foreign direct investment (FDI), sovereign debt ratings, and entrepreneurship, Noland finds that responses to the Pew questions correlate with the economic variables, conveying information beyond what could be explained through standard economic models alone. His results indicate that countries with more tolerant attitudes toward globalization attract more FDI, obtain better debt ratings, and exhibit more local entrepreneurship.