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Foreign direct investment and the demand for protection in the United States

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  • Goodman, John B.
  • Spar, Debora
  • Yoffie, David B.

Abstract

Over the past decade, foreign direct investment (FDI) in the United States has grown dramatically, changing the composition of many U.S. industries and bringing foreignowned firms into the domestic political process. Presumably, FDI also has affected the politics of protection, by both altering the domestic coalitions around protectionist demands and shifting the potential benefits that protectionism is likely to bring. To understand this process, we create and test a model that examines the level of inward investment and the extent to which this investment either complements or substitutes for existing import levels. Import-complementing investment, we suggest, will cause a split in protectionist demands, with local producers favoring protectionism and foreign investors pushing for free trade. Import-substituting investment, by contrast, will create convergent interests between local and foreign producers. In both cases, inward FDI reshuffles traditional alliances and demands for protection, challenging many prevailing views about protectionism in the United States.

Suggested Citation

  • Goodman, John B. & Spar, Debora & Yoffie, David B., 1996. "Foreign direct investment and the demand for protection in the United States," International Organization, Cambridge University Press, vol. 50(4), pages 565-591, October.
    • Handle: RePEc:cup:intorg:v:50:y:1996:i:04:p:565-591_03
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    Cited by:

    1. Michael J. Hiscox, 2004. "International Capital Mobility And Trade Politics: Capital Flows, Political Coalitions, And Lobbying," Economics and Politics, Wiley Blackwell, vol. 16(3), pages 253-285, November.
    2. Robert E. Lipsey & Robert C. Feenstra & Carl H. Hahn & George N. Hatsopoulos, 1999. "The Role of Foreign Direct Investment in International Capital Flows," NBER Chapters, in: International Capital Flows, pages 307-362, National Bureau of Economic Research, Inc.
    3. Bruce A. Blonigen & Yuka Ohno, 2019. "Endogenous Protection, Foreign Direct Investment and Protection-building Trade," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 6, pages 205-233, World Scientific Publishing Co. Pte. Ltd..
    4. Christopher Kobrak & Michael-Jörg Oesterle & Björn Röber, 2018. "Escape FDI and the Varieties of Capitalism: Why History Matters in International Business," Management International Review, Springer, vol. 58(3), pages 449-464, June.
    5. Powell, K. Skylar & Lim, Eunah, 2017. "Investment motive as a moderator of cultural-distance and relative knowledge relationships with foreign subsidiary ownership structure," Journal of Business Research, Elsevier, vol. 70(C), pages 255-262.
    6. Ka Zeng & Yue Lu & Ya‐wei Li, 2021. "Trade agreements and Global Value Chain (GVC) participation: Evidence from Chinese industries," Economics and Politics, Wiley Blackwell, vol. 33(3), pages 533-582, November.
    7. Eden, Lorraine & Molot, Maureen Appel, 2002. "Insiders, outsiders and host country bargains," Journal of International Management, Elsevier, vol. 8(4), pages 359-388.
    8. Robert C. Feenstra, "undated". "Facts And Fallacies About Foreign Direct Investment," Department of Economics 98-04, California Davis - Department of Economics.
    9. William P. Wan & Amy J. Hillman, 2006. "One of these things is not like the others: What contributes to dissimilarity among MNE subsidiaries’ political strategy?," Management International Review, Springer, vol. 46(1), pages 85-107, February.

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