Multinational Corporations and their Influence Through Lobbying on Foreign Policy

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Multinational corporations (MNCs) play significant roles in shaping  the global economy. Despite the prevalence of the economic activities of MNCs across the globe, few studies exist that examine their political influence on foreign policy-making. This chapter develops a theoretical framework for understanding how MNCs' unique  positions in the market affect their political  activities. Specifically, we argue that MNCs' economic dominance  reduces the relative cost of engaging in political activities, while  their large-scale transnational activities increase the marginal  benefits of influencing policy-making individually. To examine this  empirically, we first introduce a novel dataset of lobbying in the  US encompassing lobbying activities of all public firms from 1999 to  2019. We then employ the difference-in-differences identification  strategy to estimate the effect of MNC status on lobbying. We find  strong evidence for an increase in lobbying expenditures when firms  become multinational. Furthermore, we find that MNCs tend to lobby  on a more diverse set of foreign policy issues. Our findings suggest that MNCs are important political actors whose distinct interests and influence  should be incorporated into our understanding of foreign policy-making.