| Abstract: | Domestic producers in the U.S. have not lobbied for formal restrictions on incoming foreign direct investment in the same way that they have for import barriers, even though both types of foreign competition depress profits. At the same time, many U.S.-based multinational corporations, despite their global orientation, have put forth demands for government policies that favor American ownership. Domestically based producers have conflicting economic interests; they want protection against foreign competitors, against the possibility of retaliation, and against the perceived injuries sustained from investment restrictions abroad. Economic interests, then, lead to indeterminate predictions of how firms will respond to IFDI. Firms will only demand policies that they see as feasible (which depends on the presence of domestic institutions to channel demands and supply the policy output) and legitimate (which depends on how the policy accords with widely held norms regarding the proper role of the state). Understanding the domestic responses to globalization requires more research on the political, as well as economic, origins of policy demands. |
