Multinational Corporations and their Influence Through Lobbying on Foreign Policy

Citation:

Kim, In Song, and Helen V. Milner. 2021. “Multinational Corporations and their Influence Through Lobbying on Foreign Policy”. In Global Goliaths: Multinational Corporations in a Changing Global Economy, Washington, DC: The Brookings Institution , p. 497-536.

Section:

12

ISBN Number:

9780815738558

Abstract:

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 a 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.

Publisher's Version

Last updated on 04/09/2021