TY  - JOUR
AU  - Blonigen,Bruce A.
AU  - Feenstra,Robert C.
TI  - Protectionist Threats and Foreign Direct Investment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5475
PY  - 1996
Y2  - March 1996
UR  - http://www.nber.org/papers/w5475
L1  - http://www.nber.org/papers/w5475.pdf
N1  - Author contact info:
Bruce Blonigen
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4680
Fax: 541/346-1243
E-Mail: bruceb@uoregon.edu

Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA  95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu
M1  - published as Bruce A. Blonigen, Robert C. Feenstra. "Protectionist Threats and Foreign Direct Investment," in Robert C. Feenstra, editor, "The Effects of U.S. Trade Protection and Promotion Policies" University of Chicago Press (1997)

AB  - The recent literature on quid pro quo foreign direct investment (FDI) suggests that FDI may be induced by the threat of protection, and further, that FDI may be used as an instrument to defuse a protectionist threat.  This paper uses a panel data set of 4-digit SIC level observations of Japanese manufacturing FDI into the United States in the 1980s to explore these hypotheses empirically.  We find strong statistical support for the hypothesis that higher threats of protection lead to greater FDI flows, and post-regression simulations find that a rise in the expected probability of protection from five to ten percent means over a 30 percent rise in next-period FDI flows for an average industry.  In addition, there is evidence that non- acquisition FDI by the Japanese had success in defusing the threat of an escape clause investigation in future periods.
ER  -