Doctoral Dissertation Research in Political Science: Open Trade for Sale: Lobbying by Productive Exporting Firms

Princeton University, Princeton NJ

Investigators

Abstract

Existing theories in international political economy predict conflicting political interests with respect to trade policy at the industry level: import-competing industries want protection from foreign competition whereas exporting industries demand open trade. However, in most countries some firms export while others, facing competition from imported products, provide goods only to their domestic markets even within the same industry. Who are the political actors supporting trade liberalization, and who are the supporters of protection when the distinction between import-competing industries versus export industries has become unclear? To explain this, the proposed project considers manufacturing firms as important political actors unlike other studies that consider them mainly as economic agents. A detailed study of such political behavior would underscore a new source of pressure faced by governments when setting trade policies. Intellectual Merit: This is one of the first projects in the field of international political economy that tests whether there is an effect of lobbying by exporting firms on trade liberalization. The project aims to identify the political mechanism by creating a new lobbying dataset that automatically extracts and updates detailed lobbying activities of all manufacturing firms, which became available under the Lobbying Disclosure Act of 1995. Any firm that lobbied at least once will then be matched with firms in multiple finance databases in order to identify the trade policies in which they have a direct economic interest. Firms produce different products even when they belong to a same industry. For example, some textile firms produce shirts made of wool while others make them with linen. Consequently, it is hard to assume that these firms would have same preference over trade policy. This project shows that the incentives of exporting firms to lobby can be stronger than those of their import-competing counterparts when products are sufficiently different. Product differentiation implies that lobbying will benefit only a small number of firms that actually produce the different products in question. As a result, the theory predicts that exporting firms are more likely to lobby overcoming their collective problems. The dataset would be used to test whether a high degree of product differentiation within an industry is associated with 1) active lobbying by exporting firms and 2) trade liberalization. Broader Impacts: In the era of globalization, multinational corporations that control the movements of goods, services and people have become important political agents in setting trade, immigration, environment, and security policies. With the new insights offered by this project, social scientists and policy makers will be able to understand under what condition producers of goods and services can actively influence decisions made by governments around the world. The entire dataset would be updated quarterly and will be publicly available. The lobbying dataset, a panel of any foreign and domestic entities who have lobbied the U.S. government since 1999, would allow social scientists to explore research topics related to lobbying such as defense, health, and energy.