Replication Data for: Ethnocentrism Reduces Foreign Direct Investment

The tension between global economic integration and ethnocentrism is a growing political force across industrialized countries. Whereas extent research emphasizes ethnocentrism’s influence on individual attitudes, we show that ethnocentrism directly contributes to economic decline by reducing greenfield foreign direct investment (FDI). We exploit greenfield FDI’s popularity to isolate ethnocentrism’s effects on economic activity. Our analysis of US state greenfield FDI flows during 2004-2012 holds constant country-level factors that correlate with both ethnocentrism and propensity to receive FDI. A one standard deviation increase in state-level ethnocentrism corresponds to nearly $229 million less greenfield FDI and 180 fewer jobs per state-year on average. Findings are robust to controls for state economic conditions, transactions costs, existing FDI stock, size of foreign-born population, and state partisanship. These findings demonstrate the economic cost of ethnocentrism-based political strategies and that mass political sentiment can directly undermine economic integration.