Do media narratives shape foreign ownership? Evidence from African regions

arXiv:2403.10239v2 Announce Type: replace Abstract: Foreign investors rarely observe local business conditions directly, especially in developing economies where reliable subnational information is limited. In such contexts, media narratives may shape how investment locations are perceived by increasing their visibility and framing local risks and opportunities. This paper examines the relationship between media narratives and foreign ownership across African locations. We combine firm-level data from the World Bank Enterprise Surveys with a novel corpus of 167,746 English-language news articles on industrial investment in Africa published between 2014 and 2019. Using text mining and semantic network analysis, we construct investment-location measures of the semantic importance of business-related media themes through the Semantic Brand Score (SBS) and study their associations with firm-level foreign ownership. The results point to a significant association between how the media frames a location and the level of foreign presence there. This association varies across frames. It is predominantly positive, relates to both the intensive and extensive dimensions of foreign ownership depending on the theme, and may interact negatively with the investment climate. This paper contributes to research on the geography of foreign capital by identifying public narratives as a feature of the information environment associated with observed foreign-equity participation.