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Foreign Direct Investment in Political Influence

Jieun Lee
Tuesday, March 13, 2018
12:00-1:30 PM
5670-- Eldersveld Haven Hall Map
Abstract: Do foreign interests influence US politics? I investigate this question by examining patterns of campaign contributions among foreign firms. While statutorily forbidden from directly giving campaign money, foreign multinationals may be able to influence American politics through their US subsidiaries. Consistent with this, I show that the US subsidiaries of foreign multinationals are more likely to give campaign contributions, give contributions that are vastly larger, and locate significantly closer to Capitol Hill than domestic firms, controlling for industry sector and firm size. While contributing 5% to US GDP, majority foreign-owned firms account for more than 11% of all corporate campaign contributions. I argue that this greater political intensity is driven primarily by the desire of subsidiaries to represent the political interests of their foreign parent corporations, and rule out alternative explanations like a `foreignness premium' and political inexperience. I conclude that foreign multinationals are a significant political actor in the US, and that foreign direct investment in the US partly serves as an investment in political influence.
Building: Haven Hall
Event Type: Workshop / Seminar
Tags: Politics
Source: Happening @ Michigan from Political Economic Workshop (PEW), Department of Political Science