Sub-national Institutions and Inward Foreign Direct Investment: Effects of Political Party Pendulum Swings

Rusty V. Karst and Andrew Johnson

The International Trade Journal, 2022, vol. 36, issue 3, 177-199

Abstract: While the influence of national institutions is well-documented, we theorize and investigate how sub-national institutions affect localization of foreign direct investment into a sub-national geographic area. Specifically, we examine the effect of county-level political ideology and party majority affiliation in the United States on inward foreign direct investment through foreign-sourced greenfield start-ups in that county. As predicted, in examination of 2,978 counties (94.7% of all US counties), the dichotomous majority party affiliation (Republican versus Democrat) differentially influenced foreign-sourced greenfields. Significantly decreased levels of foreign-sourced greenfields were experienced in counties during a Republican majority relative to Democratic, all else being held equal.

Date: 2022
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DOI: 10.1080/08853908.2021.1909514

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