Governance Implications of Multinational Firm Activity

Session Submission Type: In-Person Full Paper Panel

Session Description

The role of multinational corporations (MNCs) in domestic, international, and transnational governance has been increasingly prominent in the era of economic globalization. Much needs to be understood about the ways in which multinational firms and their activities at home and abroad interact with patterns of governance, given deepening integration of production chains, increasing strategic value of technological assets, and other recent phenomena. How is the rise of global value chains (GVCs) interacting with international institutions and changing MNC behavior? How do governance institutions in both home and host countries respond to activities of multinational corporations? This panel examines these questions in depth and offers novel perspectives and rigorous analysis through a set of four papers.

In “Multinational Firms and the Impact of Trade Disputes on Investment Decisions”, Yoo-Sun Jung and Erica Owen contend that the degree of global value chain integration affects politics by changing how MNCs respond to trade disputes. They find that trade disputes over intermediate goods, relative to final goods, are more likely to drive MNC activity to third countries. Carolina Moehlecke, Calvin Thrall, and Rachel Wellhausen shed light on how GVC integration puts pressure on host countries to forgo regulatory autonomy in their paper “Global Value Chains as a Constraint on Sovereignty: Evidence from Investor-State Dispute Settlement” (ISDS). Using a novel dataset, they find that host countries cancel about 24% of regulations disputed in ISDS. Siyao Li’s paper “Closing the Institutional Gap: Protecting Technology in Foreign Direct Investment” shifts gears to consider how foreign investments not adequately protected through international institutions and ISDS can be protected. She demonstrates that MNCs can employ strategies to protect their technological assets through host countries’ domestic institutions even when such institutions are relatively weak. Boram Lee and Sooahn Shin’s paper “Home Advantage in the Politics of Shaming: Evidence from the OECD Guidelines” studies the role that NGOs have in governing MNCs. They reveal that NGOs with home country presence are more effective in pressuring governments to hold MNCs accountable for their human rights and environmental conduct.

Sub Unit

• Division 16: International Political Economy

Chair

• Jeffry A. Frieden Harvard University

Discussants

• Edmund J. Malesky Duke University

• Sonal S. Pandya University of Virginia

Individual Presentations

• Multinational Firms and the Impact of Trade Disputes on Investment Decisions - Yoo Sun Jung, University College Dublin; Erica Owen, University of Pittsburgh

• Global Value Chains as a Constraint on Sovereignty: Evidence from ISDS - Carolina Moehlecke, Fundação Getulio Vargas; Rachel Wellhausen, University of Texas at Austin; Calvin Thrall

• Closing the Institutional Gap: Protecting Technology in FDI - Siyao Li, University of Pennsylvania

• Home Advantage in the Politics of Shaming: Evidence from the OECD Guidelines (Pre-Recorded) - Boram Lee, University of Pennsylvania