Does partisan conflict deter FDI inflows to the US?

Marina Azzimonti

Journal of International Economics, 2019, vol. 120, issue C, 162-178

Abstract: I analyze how partisan conflict about trade policy affects foreign direct investment flows to the US using a novel indicator, the Trade Partisan Conflict Index (TPCI). Partisan conflict is relevant for the evolution of cross-border capital flows because the expected returns on investment projects are less predictable when the timing, size, and composition of trade policy is uncertain. The trade partisan conflict index tracks the evolution of political disagreement among policymakers on topics such as tariffs, subsidies, and trade agreements as reported by the media. Using data from 1985 to 2016, I show that an innovation of the TPCI is associated with a significant decline in FDI flows to the US. The effect is also present when disaggregated (annual) data from a panel of parent countries is considered instead.

Keywords: Foreign Direct Investment; Trade Partisan Conflict Index; Policy Uncertainty; FDI; Capital Flows; Trade Policy (search for similar items in EconPapers)
JEL-codes: E3 E6 F3 H3 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199619300637
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Does Partisan Conflict Deter FDI Inflows to the US? (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:120:y:2019:i:c:p:162-178

DOI: 10.1016/j.jinteco.2019.06.001

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().