MANILA, Philippines – Among emerging countries, the Philippines is the most open to allowing foreigners to buy local companies, a report from the Pew Research Center said.
In a September 16 report by the US-based think tank, the Philippines comes out on top (66%) among emerging economies in terms of openness to foreign ownership of local enterprises. It is followed by Venezuela (65%) and Nigeria (64%).
Pew Research noted that developing countries such as Bangladesh (69%), Tanzania (68%), and Kenya (66%) hold the most positive view among the 44 countries surveyed in the report.
Developing countries are also more optimistic about the benefits of trade and foreign investment, while advanced economies – including some which are key players in negotiating regional trade pacts – are more wary about its benefits.
The report, titled “Faith and Skepticism about Trade, Foreign Investment,” was released as Philippine President Benigno Aquino III went on a 4-nation visit to Europe, a trip that, he said, yielded $2.3 billion in investments to the Philippines.
Aquino continues his bid to sell the Philippines as an investment destination when he visits 3 US cities from September 20 to 24.
Mixed views on foreign investment
According to the Pew Research report, a median of 70% in emerging countries approve of foreigners building new factories in their country, but only 44% approve of foreigners buying local firms – a difference of 26 percentage points.
Among the emerging countries, the Philippines is most open to the view, with 66% of Filipinos saying it is good for the economy and only 30% disagreeing.
The percentage of Filipinos who agree with this view is notably higher than respondents from the emerging market BRICS economies – Brazil, Russia, India, China and South Africa.
55% of respondents from Brazil agree that foreign ownership of local companies will be beneficial, a view also held by respondents from India (56%) and South Africa (57%).
In contrast, only 38% of Russians and 39% of Chinese say foreign acquisitions would be beneficial for their country.
Pew Research noted that a global median of 74% approve of foreign companies building new factories in their country because of the opportunities for job creation and greater economic activity.
However, views on foreign firms buying local businesses are mixed: a global median of 45% consider it good, while 47% say it is bad for the economy.
Pew Research said this mixed view could be attributed to concerns over “new management, a new business culture and possible company consolidation with attendant job losses.”
Based on the report, African countries are the most supportive of both types of foreign capital inflows.
In contrast, 74% of advanced economies support the building of new firms in their countries, but only 31% say foreign-led mergers and acquisitions are beneficial.
Views on trade
While developing countries are more positive about the effects of trade on job creation and increase in wages, advanced economies are more skeptical about the benefits of foreign investment.
Key economies such as France, Italy, Japan and the United States, in particular, are doubtful about the positive impact of trade.
59% of Italians say trade destroys jobs, while 52% say it would lower wages. Meanwhile, 76% of Japanese respondents say foreign companies buying local firms is bad for their economy.
Pew Research noted that the sentiments of these 4 countries are crucial because they account for 24% of world merchandise imports and 21% of world services imports.
“Protectionist sentiments in any of these societies, if acted upon, can reverberate around the world,” the think tank added.
Implications on trade pacts
Pew Research also said that the 4 countries’ views on trade benefits are out of step with their counterparts involved in the negotiation of regional trade agreements.
Japan and the US are involved in efforts to negotiate the Trans-Pacific Partnership (TPP) among countries in Asia, North America, and South America that border on the Pacific Ocean.
Meanwhile, France and the US are negotiating the Transatlantic Trade and Investment Partnership (TTIP) with other European Union members.
Pew Research said the Americans, French, Italians, and Japanese are skeptical about the positive impact of trade on wages and the value of foreigners buying local companies compared to other advanced economies surveyed in the report.
“That undercurrent of skepticism could complicate current government efforts to further deepen and broaden global markets,” the report said.
Pew Research based the study on 48,643 interviews from March 17 to June 5. Researchers spoke to adults 18 years and older across 44 countries.
In the Philippines, Pew Research had a sample size of 1,008 and a margin of error of ±4.0 percentage points. – Rappler.com
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