Hostname: page-component-78c5997874-8bhkd Total loading time: 0 Render date: 2024-11-13T04:14:58.681Z Has data issue: false hasContentIssue false
  • English
  • Français

Globalizing the Supply Chain: Firm and Industrial Support for US Trade Agreements

Published online by Cambridge University Press:  02 April 2018

Iain Osgood
Get access

Abstract

From 1960 to 2000, manufacturing supply chains became global. To what extent has this growth in offshore outsourcing and foreign direct investment affected industrial attitudes toward trade liberalization? Using data on public positions of US firms and trade associations on all free trade agreements since 1990, I show that foreign direct investment (FDI) and input sourcing are the primary drivers of support for trade liberalization. Direct import competition and export opportunities play a secondary role in shaping support for free trade agreements. This work therefore adds to the literature on the politics of globalization by providing systematic evidence of a link between global supply chains and industrial preferences, and by developing a new model of the determinants of industrial attitudes toward trade.

Type
Research Article
Information
International Organization , Volume 72 , Issue 2 , Spring 2018 , pp. 455 - 484
Copyright
Copyright © The IO Foundation 2018 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acharya, Ram C. 2015. Trade Policy in Lobbying Equilibrium: With Non-Traded and Traded Final Goods and Intermediate Inputs. Economics and Politics 27 (2):313–36.CrossRefGoogle Scholar
Antràs, Pol, and Helpman, Elhanan. 2004. Global Sourcing. Journal of Political Economy 112 (3):552–80.CrossRefGoogle Scholar
Antràs, Pol, and Staiger, Robert W.. 2012. Offshoring and the Role of Trade Agreements. American Economic Review 102 (7):3140–83.CrossRefGoogle Scholar
Autor, David, Dorn, David, and Hanson, Gordon. 2013. The China Syndrome: Local Labor Market Effects of Import Competition in the United States. The American Economic Review 103 (6):2121–68.Google Scholar
Baccini, Leonardo, and Dür, Andreas. 2015. Investment Discrimination and the Proliferation of Preferential Trade Agreements. Journal of Conflict Resolution 59 (4):617–44.CrossRefGoogle Scholar
Baccini, Leonardo, Dür, Andreas, and Elsig, Manfred. 2016. Intra-Industry Trade, Global Supply Chains and the Political Economy of Preferential Trade Liberalization. Working Paper. McGill University.Google Scholar
Baccini, Leonardo, Pinto, Pablo, and Weymouth, Stephen. 2017. The Distributional Consequences of Preferential Trade Liberalization: Firm-Level Evidence. International Organization 71 (2):373–95.Google Scholar
Bergstrand, Jeffrey H., and Egger, Peter. 2008. The Growth of FDI Relative to Trade: Measurement, Determinants, and Consequences of International Trade Flows in Intermediates. Working Paper, University of Notre Dame.Google Scholar
Blanchard, Emily J. 2010. Reevaluating the Role of Trade Agreements: Does Investment Globalization Make the WTO Obsolete? Journal of International Economics 82 (1):63–72.Google Scholar
Blanchard, Emily, and Matschke, Xenia. 2015. US Multinationals and Preferential Market Access. Review of Economics and Statistics 97 (4):839–54.Google Scholar
Büthe, Tim, and Milner, Helen. 2008. The Politics of Foreign Direct Investment into Developing Countries: Increasing FDI through International Trade Agreements? American Journal of Political Science 52 (4):741–62.CrossRefGoogle Scholar
Campa, Jose, and Goldberg, Linda S. 1997. The Evolving External Orientation of Manufacturing: A Profile of Four Countries. Federal Reserve Bank of New York Economic Policy Review 3 (2):53–81.Google Scholar
Dreiling, Michael C. 2000. The Class Embeddedness of Corporate Political Action: Leadership in Defense of the NAFTA. Social Problems 47 (1):21–48.CrossRefGoogle Scholar
Drope, Jeffrey, and Hansen, Wendy. 2006. Does Firm Size Matter? Analyzing Business Lobbying in the United States. Business and Politics 8 (2):1–17.CrossRefGoogle Scholar
Dür, Andreas, Baccini, Leonardo, and Elsig, Manfred. 2014. The Design of International Trade Agreements: Introducing a New Dataset. The Review of International Organizations 9 (3):353–75.Google Scholar
Elkins, Zachary, Guzman, Andrew T, and Simmons, Beth A. 2006. Competing for Capital: The Diffusion of Bilateral Investment Treaties, 1960–2000. International Organization 60 (4):811–46.CrossRefGoogle Scholar
Feenstra, Robert C., and Hanson, Gordon H.. 1996. Globalization, Outsourcing, and Wage Inequality. The American Economic Review 86 (2):240–45.Google Scholar
Feenstra, Robert C., Robert, Inklaar and Timmer, Marcel P.. 2015. The Next Generation of the Penn World Table. American Economic Review 105 (10):3150–82.Google Scholar
Fontagné, Lionel, and Freudenberg, Michael. 1997. Intra-Industry Trade: Methodological Issues Reconsidered, vol. 97. Paris: CEPII.Google Scholar
Frieden, Jeffry A. 2002. Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration. International Organization 56 (4):831–60.CrossRefGoogle Scholar
Gawande, Kishore, and Bandyopadhyay, Usree. 2000. Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection. Review of Economics and Statistics 82 (1):139–52.Google Scholar
Gawande, Kishore, Krishna, Pravin, and Olarreaga, Marcelo. 2012. Lobbying Competition Over Trade Policy. International Economic Review 53 (1):115–32.Google Scholar
Gilens, Martin, and Page, Benjamin I.. 2014. Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens. Perspectives on Politics 12 (3):564–81.Google Scholar
Gowa, Joanne, and Kim, Soo Yeon. 2005. An Exclusive Country Club: The Effects of the GATT on Trade, 1950–94. World Politics 57 (4):453–78.Google Scholar
Gowa, Joanne, and Mansfield, Edward. 1993. Power Politics and International Trade. American Political Science Review 87 (2):408–20.CrossRefGoogle Scholar
Henderson, Jeffrey, Dicken, Peter, Hess, Martin, Coe, Neil, and Yeung, Henry Wai-Chung. 2002. Global Production Networks and the Analysis of Economic Development. Review of International Political Economy 9 (3):436–64.Google Scholar
Jandhyala, Srividya, Henisz, Witold J., and Mansfield, Edward D.. 2011. Three Waves of BITs: The Global Diffusion of Foreign Investment Policy. Journal of Conflict Resolution 55 (6):1047–73.Google Scholar
Jensen, Bradford, Quinn, Dennis, and Weymouth, Stephen. 2015. The Influences of Foreign Direct Investments, Intrafirm Trading, and Currency Undervaluation on US Firm Trade Disputes. International Organization 69 (4):913–47.CrossRefGoogle Scholar
Jensen, Nathan M. 2003. Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment. International Organization 57 (3):587–616.Google Scholar
Jensen, Nathan M. 2012. Fiscal Policy and the Firm: Do Low Corporate Tax Rates Attract Multinational Corporations? Comparative Political Studies 45 (8):1004–26.Google Scholar
Jensen, Nathan M., Malesky, Edmund, and Weymouth, Stephen. 2014. Unbundling the Relationship Between Authoritarian Legislatures and Political Risk. British Journal of Political Science 44 (3):655–84.CrossRefGoogle Scholar
Kerner, Andrew. 2009. Why Should I Believe You? The Costs and Consequences of Bilateral Investment Treaties. International Studies Quarterly 53 (1):73–102.Google Scholar
Kim, In Song. 2017. Political Cleavages Within Industry: Firm-level Lobbying for Trade Liberalization. American Political Science Review 111 (1):1–20.Google Scholar
Kim, In Song, Milner, Helen V, Bernauer, Thomas, Spilker, Gabriele, Tingley, Dustin, and Osgood, Iain. 2017. Firms’ Preferences over Multidimensional Trade Policies: Global Production Chains, Investment Protection and Dispute Settlement Mechanisms. Unpublished manuscript. MIT.Google Scholar
Kollman, Ken. 1998. Outside Lobbying: Public Opinion and Interest Group Strategies. Princeton, NJ: Princeton University Press.Google Scholar
Lee, Hak-Seon. 2014. Outward Foreign Direct Investment, Interindustry Networks, and US Trade Politics. The International Trade Journal 28 (2):140–68.CrossRefGoogle Scholar
Lux, Sean, Crook, Russell, and Woehr, David. 2011. Mixing Business with Politics: A Meta-analysis of the Antecedents and Outcomes of Corporate Political Activity. Journal of Management 37 (1):223–47.Google Scholar
Madeira, Mary Anne. 2014. The New Politics of the New Trade: The Political Economy of Intra-Industry Trade. In Handbook of the International Political Economy of Trade, edited by Deese, David, 113–34. Cheltenham, UK: Edward Elgar.Google Scholar
Manger, Mark S. 2005. Competition and Bilateralism in Trade Policy: The Case of Japan's Free Trade Agreements. Review of International Political Economy 12 (5):804–28.Google Scholar
Manger, Mark S. 2009. Investing in Protection: The Politics of Preferential Trade Agreements Between North and South. New York: Cambridge University Press.Google Scholar
Manger, Mark S. 2012. Vertical Trade Specialization and the Formation of North-South PTAs. World Politics 64 (04):622–58.CrossRefGoogle Scholar
Manger, Mark S. 2014. The Economic Logic of Asian Preferential Trade Agreements: The Role of Intraindustry Trade. Journal of East Asian Studies 14 (2):151–84.Google Scholar
Mansfield, Edward, and Bronson, Rachel. 1997. Alliances, Preferential Trading Arrangements, and International Trade. American Political Science Review 91 (1):94–107.Google Scholar
Mansfield, Edward, and Milner, Helen. 2012. Votes, Vetoes, and the Political Economy of International Trade Agreements. Princeton, NJ: Princeton University Press.Google Scholar
Mansfield, Edward, Milner, Helen, and Pevehouse, Jon. 2007. Vetoing Co-operation: The Impact of Veto Players on Preferential Trading Arrangements. British Journal of Political Science 37 (3):403–32.Google Scholar
Mansfield, Edward, Milner, Helen, and Peter Rosendorff, B.. 2002. Why Democracies Cooperate More: Electoral Control and International Trade Agreements. International Organization 56 (3):477–513.Google Scholar
Mansfield, Edward D., and Reinhardt, Eric. 2008. International Institutions and the Volatility of International Trade. International Organization 62 (4):621–52.Google Scholar
McCalman, Phillip. 2004. Protection for Sale and Trade Liberalization: An Empirical Investigation. Review of International Economics 12 (1):81–94.Google Scholar
Milner, Helen. 1988a. Resisting Protectionism: Global Industries and the Politics of International Trade. Princeton, NJ: Princeton University Press.Google Scholar
Milner, Helen. 1988b. Trading Places: Industries for Free Trade. World Politics 40 (3):350–76.Google Scholar
Milner, Helen. 1997. Industries, Governments, and Regional Trade Blocs. In The Political Economy of Regionalism, 77–106. New York: Columbia University Press.Google Scholar
Miroudot, Sébastien, Lanz, Rainer, and Ragoussis, Alexandros. 2009. Trade in Intermediate Goods and Services. OECD Trade Policy Papers (93):5–96.Google Scholar
Osgood, Iain. 2016. Differentiated Products, Divided Industries: Firm Preferences Over Trade Liberalization. Economics and Politics 28 (2):161–80.Google Scholar
Osgood, Iain. 2017a. Industrial Fragmentation Over Trade: The Role of Variation in Global Engagement. International Studies Quarterly 61 (3):642–59.Google Scholar
Osgood, Iain. 2017b. The Breakdown of Industrial Opposition to Trade: Firms, Product Variety and Reciprocal Liberalization. World Politics 69 (1):184–231.CrossRefGoogle Scholar
Osgood, Iain, Tingley, Dustin, Bernauer, Thomas, Song Kim, In, Milner, Helen, and Spilker, Gabriele. 2017. The Charmed Life of Superstar Exporters: Survey Evidence on Firms and Trade Policy. Journal of Politics 79 (1):133–52.Google Scholar
Owen, Erica. 2013. Unionization and Restrictions on Foreign Direct Investment. International Interactions 39 (5):723–47.Google Scholar
Pierce, Justin R., and Schott, Peter K.. 2016. The Surprisingly Swift Decline of US Manufacturing Employment. The American Economic Review 106 (7):1632–62.Google Scholar
Pinto, Pablo M. 2013. Partisan Investment in the Global Economy: Why the Left Loves Foreign Direct Investment and FDI Loves the Left. New York: Cambridge University Press.CrossRefGoogle Scholar
Pinto, Pablo M., and Pinto, Santiago M.. 2008. The Politics of Investment Partisanship and the Sectoral Allocation of Foreign Direct Investment. Economics and Politics 20 (2):216–254.Google Scholar
Plouffe, Michael. 2012. The New Political Economy of Trade: Heterogeneous Firms and Politics. Working Paper, University College London.Google Scholar
Plouffe, Michael. 2017. Firm Heterogeneity and Trade-Policy Stances: Evidence from a Survey of Japanese Producers. Business and Politics 19 (1):1–40.Google Scholar
Rauch, James E. 1999. Networks Versus Markets in International Trade. Journal of International Economics 48 (1):7–35.Google Scholar
Schattschneider, E.E. 1935. Politics, Pressures, and the Tariff. North Stratford, NH: Ayer.Google Scholar
UNCTAD. 1999. Foreign Direct Investment and Development. UNCTAD Series on Issues in International Investment Agreements. Available at <https://www.census.gov/foreign-trade/statistics/press-release/index.html>. Accessed 13 February 2018. New York.+Accessed+13+February+2018.+New+York>Google Scholar
Walter, Stefanie. 2008. A New Approach for Determining Exchange-Rate Level Preferences. International Organization 62 (3):405–38.CrossRefGoogle Scholar
Whalley, John. 1998. Why Do Countries Seek Regional Trade Agreements? In The Regionalization of the World Economy, 63–90. Chicago: University of Chicago Press.Google Scholar
Yeats, Alexander J. 1998. Just How Big is Global Production Sharing? World Bank Policy Research Working Paper (1871).Google Scholar
Supplementary material: PDF

Osgood supplementary material 1

Online Appendix

Download Osgood supplementary material 1(PDF)
PDF 153 KB
Supplementary material: File

Osgood supplementary material 2

Online Appendix

Download Osgood supplementary material 2(File)
File 120.1 KB
Supplementary material: File

Osgood supplementary material 3

Online Appendix

Download Osgood supplementary material 3(File)
File 8.2 MB