Globalization & Altruism Towards the Poor in Developing Countries: an Experiment in India
Sera Linardi, Nita Rudra
University of Pittsburgh
The causal link between globalization and attitudes towards the poor has never been established in an empirical test. We propose and test the hypothesis that in less developed countries (LDC), globalization in the form of foreign direct investment (FDI) can reduce altruism towards the poor due to the perception that FDI provides the poor with a way out of poverty. Building upon Piketty (1995), we further predict that the impact of FDI on giving to the poor will be most negative among the upper income conservatives and the least negative among lower income liberals. We conducted a framed field experiment in India where survey takers can redistribute their compensation to the poor living near industrial areas. We find that mentioning foreign ownership decreases donations when the industry is in the low skill sector but not if it is in the high skill sector. This suggests that FDI has an impact of giving when it changes perceptions about opportunities for the poor. Cross- country regressions using the World Values Survey not only confirm this link but further establish that FDI has the most negative impact on giving among upper income conservatives and the least negative impact among lower income liberals. Taken as a whole, our findings suggest that there is indeed a causal link between globalization and altruism towards the poor that is mediated by beliefs about opportunities for the poor.