Abstract: After the collapse of Soviet-style planned economies, the liberalization of Foreign Direct Investment (FDI) was considered critical for fostering technology adoption and achieving economic development. On the political side, the naïve expectation was that workers would welcome FDI, whereas the current industrial elite would oppose it. In reality, however, workers and managers often formed a powerful bloc against liberalization. This paper develops a formal model to explain why managers and labor unions may form political coalitions during periods of reform and how information asymmetry between managers and workers influences their policy choices. Since managers possess more information about economic conditions, they can sometimes persuade workers to perceive the managers' preferred policy as the best option for workers' welfare. If workers believe that managers’ interests are somewhat aligned with theirs and that managers possess a moderate informational advantage, managers can persuade workers that protectionist policies are in their best interest. In contrast, a misalignment of interests or an excessively large informational disparity might lead to excessive liberalization. The logic of this model can help inform policy debates on how domestic politics affect FDI policies.