Industrial Fragmentation over Trade: The Role of Variation in Global Engagement

Abstract

The firms that compose a typical American industry regularly part ways over trade policy, choosing to lobby or publicly comment on their own rather than collectively via their industry association. Emphasizing the importance of firm heterogeneity in global engagement, I consider the role of multinationalization and global sourcing in generating these disagreements. Each of these explanations for industrial fragmentation is supported with evidence on position-taking and lobbying from all US trade agreements since the North American Free Trade Agreement (NAFTA), as well as lobbying data on all trade policy issues. Variation in ability to benefit from globalization across firms, rather than the collective action problem or firm-specific trade protection, best explains firm-centric patterns of lobbying. These changed patterns of lobbying drive the content and scope of US trade agreements and have altered the trajectory of US trade politics.

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