INTERNATIONAL CAPITAL MOBILITY AND TRADE POLITICS: CAPITAL FLOWS, POLITICAL COALITIONS, AND LOBBYING

Michael J. Hiscox

Economics and Politics, 2004, vol. 16, issue 3, 253-285

Abstract: Conventional wisdom holds that increasing international capital mobility reduces incentives for firms to lobby for trade protection. This paper argues that the effects of increased international capital mobility on the lobbying incentives of firms depend critically upon levels of inter‐industry mobility. General‐equilibrium analysis reveals that if capital is highly industry‐specific, greater international mobility among some types of specific capital may increase lobbying incentives for owners of other specific factors and thereby intensify industry‐based rent‐seeking in trade politics. Evidence on levels of inward and outward investment in US manufacturing industries between 1982 and 1996, and on industry lobbying activities, indicate that these effects may be quite strong.

Date: 2004
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