Who is Us? Firm Foreignness, Industrial Policy, and the Politics of Global Economic Integration

Abstract

Global economic integration is not inevitable; it is a constellation of interlocking policies and behaviors, the product of choices, preferences, and politics. Political support for integration has receded from its pre-global financial crisis high tide, ushering in a period characterized by economic nationalism and political populism. International commerce has taken on a competitive tenor, with the cooperative aspirations underpinning free trade replaced by national economic competition, marked by a revival of industrial policy and treatment of firms as tools of national power. This dissertation project sheds light on factors fueling the simmering retrenchment from globalization, focusing on how group identities–national and partisan–shape public preferences and catalyze state behavior in the American context. The first two chapters interrogate questions of national identity and perceptions of foreignness; the third, the effects of partisan identity. The first chapter asks how mass publics develop preferences over industrial policy subsidies and other strategic investments, focusing on the effect of corporate nationality. Foreign multinationals play a major role in the American economy, yet little work has been done to understand public comfort with incorporating foreign firms into domestic economic strategy. Drawing on prior work in international business and social psychology, I argue that mass publics draw on their perceptions of a firm’s “foreignness” in forming preferences over subsidization, and that the public penalizes firms for their foreignness. Using a series of survey experiments, I find that the public displays a distinct preference for domestic firms in an industrial policy setting, and particularly when the project comes with security considerations. Foreignness operates through three key channels: concern over job quality, worry over political influence, and discomfort with expected labor practices. Importantly, the foreignness penalty is applied differentially by the firm’s country of origin. Rather than treating “foreignness” as a binary and penalizing all foreign firms equally, the public displays a clear preference hierarchy, strictly preferring firms from geopolitically-aligned countries to neutrals and rivals. This finding aligns with a key theoretical conjecture from this project: while the legalistic distinction of foreign is binary, the socially constructed understanding of “foreignness” is continuous. The second chapter widens the aperture from public preferences to state behavior. This chapter evaluates how different levels of American government lean on firm nationality in subsidy allocation decisions. I argue that a mutually-reinforcing set of logics–structural and political–lead the state to prioritize American corporations over firms with foreign ownership. I evaluate this theory against the universe of subsidies awarded by federal, state, and local government from 2000-2024, and find broad evidence of a foreignness penalty in subsidy allocation. In alignment with my theoretical expectations, the penalty is most pronounced in industries that carry a strategic-security charge, and is most heavily applied in federal disbursements, rather than state and local. The government–like the public–treats foreignness continuously too, as, on the whole, firms from states seen by the public as less foreign to America receive greater subsidization than firms whose home countries are seen as more foreign. The third chapter shifts focus to determinants of mass preferences towards specific trade policies. While much has been written explaining public attitudes towards trade, prior work presumes that the public’s broadly pro-trade attitudes map cleanly into preferences towards specific agreements–an assumption starkly at odds with public opinion polling. We argue that the public largely relies on partisan cues in forming preferences towards specific agreements, and that partisan cues operate asymmetrically in trade. Through a series of survey experiments in the United States and Australia, we find that the public is unmoved by cues that signal that they should support a specific agreement; signals that they should oppose, however, prove effective at shifting views. This is consistent with our theoretical expectations: negative signals stimulate uncertainty, leading recipients to think that they might be among the concentrated losers–rather than diffuse winners–from the agreement. Testing against other economic policies in the United States, and in the less-affective Australian partisan environment, we find that this asymmetric cue effect is unique to the American trade policy context, and helps explain the durable hostility to trade liberalization in the United States. These three chapters illustrate how identity-based heuristics and cues shape public preferences and state behavior towards economic integration. National identity informs the public which firms are legitimate recipients of public investment, and state behavior largely aligns with public preferences. Partisan cues convey to the public that some will lose from trade liberalization, amplifying perceptions of its negative effects. Taken together, this dissertation contributes to our understanding of the forces sustaining retrenchment from globalization.