VALPOP colleagues Vera Kunczer and Thomas Lindner from Copenhagen Business School, together with Srividya Jandhyala from ESSEC Business School, have analysed 23,795 realised foreign direct investments (FDI) across 61 host countries between 2008 and 2017, compared against more than 86,000 investments that firms could have made but did not. Their headline result is stark: a firm is 28% less likely to invest in a country with a highly populist government.

The study’s central contribution lies in what it does next. Rather than sorting populist governments into the familiar right-wing and left-wing categories, which the authors show can produce contradictory classifications of the same regime, they decompose regimes along two dimensions that matter directly to foreign firms: business orientation and stance on immigration. A foreign firm is, after all, both a business actor and an entity that “immigrates” into the host country.

These two dimensions pull in opposite directions. In pro-business regimes, the negative effect of populism on investment weakens considerably; in extremely business-oriented regimes it disappears altogether and even turns positive. Conversely, regimes with strong anti-immigration stances amplify the deterrent effect, because such governments cast foreign firms as cultural outsiders who carry foreign norms and threaten local identity. A further finding concerns alignment: when home- and host-country regimes share similar orientations on business and immigration, firms from the aligned country are treated as insiders and the entry-deterring effect of populism shrinks.

In practical terms, the study reframes political risk. The traditional view holds that risk stems from the absence of veto points and institutional checks, and applies uniformly to all foreign investors. The authors demonstrate instead that a government can leave formal institutions untouched and still generate substantial risk through narratives that delegitimise particular firms as members of the outgroup. Political risk under populism is therefore identity-based and selective: it depends on which actors the regime places inside its favoured circle and which it places outside.

This is directly relevant to VALPOP’s objectives. VALPOP examines how societal networks and their degree of populism, a construct the project defines as “networked populism,” shape the creation and distribution of public goods. The study’s core mechanism, populist governments drawing boundaries between ingroups and outgroups and allocating economic opportunity accordingly, mirrors the dynamic VALPOP investigates when networked actors transform public goods into club goods reserved for insiders. The finding on regime alignment reinforces VALPOP’s network perspective: access is granted not on neutral institutional terms but through affinity among like-minded actors.

Moreover, the authors build their measures from the V-Dem database, an expert-coded dataset on political parties worldwide, demonstrating the value of the granular, data-driven measurement of populism that VALPOP pursues in generating its own datasets on societal networks and public goods. For VALPOP, the study confirms that transparency about who stands inside and outside politically favoured networks is a precondition for accountable governance of economic access, whether the asset in question is an investment opportunity or a public good.