Popular attitudes, globalization and risk

Popular opposition to globalization may be interpreted as xenophobia or hostility to market economics and signal country risk, including the degree of security risk - the possibility that local staff or facilities could be subject to discriminatory treatment, harassment or attack. This paper integrates the Pew Global Attitudes data into a series of economic models on foreign direct investment (FDI), sovereign ratings and local entrepreneurship, and finds that some responses correlate with economic variables of interest, conveying information beyond what can be explained through standard models. More tolerant countries attract more FDI, obtain better ratings and exhibit more entrepreneurship. (International Finance / SWP)