The Influences of Foreign Direct Investments, Intrafirm Trading, and Currency Undervaluation on U.S. Firm Trade Disputes

66 Pages Posted: 20 Feb 2014

See all articles by J. Bradford Jensen

J. Bradford Jensen

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy; Peter G. Peterson Institute for International Economics

Dennis P. Quinn

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy

Stephen Weymouth

Georgetown University

Multiple version iconThere are 3 versions of this paper

Date Written: January 01, 2014

Abstract

We use the case of a puzzling decline in U.S. firm antidumping (AD) filings to explore how firm-level economic heterogeneity within U.S. industries influences political and regulatory responses to changes in the global economy. Firms exhibit heterogeneity both within and across industries regarding foreign direct investment. We propose that firms making vertical, or resource-seeking, investments abroad will be less likely to file AD petitions. Hence, we argue, the increasing vertical FDI of U.S. firms (particularly in countries with undervalued currencies) makes trade disputes far less likely. We use firm level data to examine the universe of U.S. manufacturing firms and find that AD filers generally conduct no intrafirm trade with filed-against countries. Among U.S. MNCs, the number of AD filings is negatively associated with increases in the level of intrafirm trade for large firms. In the context of currency undervaluation, we confirm the existing finding that undervaluation is associated with more AD filings. We also find, however, that high levels of related-party imports from countries with undervalued currencies significantly decrease the numbers of AD filings. Our study highlights the centrality of global production networks in understanding political mobilization over international economic policy. [192]

Suggested Citation

Jensen, J. Bradford and Quinn, Dennis P. and Weymouth, Stephen, The Influences of Foreign Direct Investments, Intrafirm Trading, and Currency Undervaluation on U.S. Firm Trade Disputes (January 01, 2014). US Census Bureau Center for Economic Studies Paper No. CES-WP- 14-04. Available at SSRN: https://ssrn.com/abstract=2398422 or http://dx.doi.org/10.2139/ssrn.2398422

J. Bradford Jensen (Contact Author)

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy ( email )

Washington, DC 20057
United States

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Dennis P. Quinn

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy ( email )

Washington, DC 20057
United States

Stephen Weymouth

Georgetown University

Washington, DC 20057
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
23
Abstract Views
398
PlumX Metrics