Multinational Firms and National Politics –

Participants:

• (Chair) Calvin Thrall, Columbia University

• (Discussant) Rachel Wellhausen, University of Texas at Austin

• (Discussant) Hao Zhang, New York University

Session Description:
This panel examines how multinational firms interact with national political environments amid rising geopolitical tension, democratic backsliding, and renewed protectionism. While a large literature treats foreign direct investment (FDI) as primarily responsive to aggregate institutional quality or market fundamentals, the papers in this session argue that firm behavior is shaped by public opinion, partisan realignment, sectoral bargaining, and state strategies to retain capital under varying conditions of political risk. Together, the panel advances  firm-centered political theories of globalization that explain not only when foreign investment is contested or withdrawn, but also why it often persists and how it reshapes domestic politics in the process. By examining factors like public opinion toward foreign capital, firm-level political realignment, and firm behavior under institutional decline, this panel shows how international investment is increasingly governed through domestic political factors.

The first paper examines the political foundations of opposition to foreign direct investment, showing through a survey experiment in India that public attitudes toward FDI are strongly shaped by investors’ country of origin and geopolitical rivalry, and are largely resistant to elite framing. The second paper theorizes firm retention under democratic backsliding, arguing that regimes experiencing democratic erosion deploy targeted resource transfers, such as subsidies, tax incentives, and favorable regulatory treatment, to compensate multinational firms for rising political risk, and supports this claim with cross-national evidence. The third paper shifts attention to the home-country politics of multinational firms, demonstrating that U.S. businesses reallocated campaign contributions in response to the Republican Party’s turn toward protectionism. The paper finds that globally integrated firms distanced themselves from Republican presidential candidates while domestically oriented firms moved closer, revealing how global production structures translate into partisan realignment. The fourth paper addresses the puzzle of investment persistence under democratic backsliding from a sectoral perspective, arguing that governments selectively protect politically salient industries through regulatory and fiscal interventions, thereby insulating key multinational investments from broader institutional decay.