Publication Type: Proceeding
Abstract: This research undertakes a specific-factors analysis of trade politics in a world of cross-border capital mobility and finds that inter-sectoral goods market relationships and labor mobility do influence the patterns of industry lobbying for trade protection when foreign capital flows into the US. This finding confirms the superior explanatory power of sectoral models over factoral models of policy outcome in trade politics. Inter-sectoral goods market relationships imply input-output sales connections between manufacturing sectors. Each sector has two goods market relationships with other sectors: sale and purchase dependencies. This research argues that inter-sectoral business connections affect a given sector’s lobbying for trade protection when its business partner sectors receive foreign direct investment (FDI) and expand production. I pay attention to inter-sectoral labor mobility because FDI-receiving sectors usually pull labor from other sectors as shown in Hiscox’s (2004) model, in which labor is treated as a uniformly mobile factor. Unlike Hiscox, I allow a given sector’s level of labor mobility to differ from that of another sector. Statistical results confirm the following: (1) when a seller sector has no competitiveness, the more the sector sells goods to a given sector, the more likely it is to lobby for protection when the buying sector receives FDI and expands production, all else equal; (2) the more a sector buys goods from a given sector, the less likely it is to lobby for protection when the selling sector receives FDI and expands production, all else constant; (3) a sector with a high level of labor mobility tends to lobby for protection more when another sector receives FDI and expands production, all else equal. Industry lobbying for trade protection is measured by (1) financial contributions to the political campaigns of members of Congress who vote for a protectionist bill; and (2) petitions filed with the US International Trade Commission (USITC) requesting anti-dumping or countervailing duties during the five Congressional periods (1981 – 1990).