The modern global economy is characterized by the extensive presence and influence of multinational corporations (MNCs). As these corporations expand their operations across national borders, they navigate a complex web of political dynamics that significantly impact their strategic decisions and investment outcomes. My primary research puzzle revolves around the mechanisms that underpin international business interactions and strategies for managing political risk. By leveraging firm-level datasets, formal theory, and quantitative analysis, my research highlights the intricate connection between multinational corporations, political contexts, and investment risks. My research has primarily focused on two key areas: (1) examining how various political dynamics influence the actions of MNCs and the resulting outcomes of their investment decisions, and (2) analyzing the implications of the transition from market-oriented to security-oriented logics when assessing the advantages and drawbacks of economic openness. This includes an examination of the institutional rules and norms governing economic exchanges. In addition to these core areas of research, I also venture into the realm of East Asian Security, a region of paramount significance. East Asia is marked by economic powerhouses such as China, Japan, and South Korea, as well as several geopolitical flashpoints.
Political Dynamics and MNCs
"Heterogeneity in Investor Response to Investment Disputes: New data on greenfield investment." with Erica Owen and Yoo Sun Jung. 2021. Journal of Politics. 83 (4): 1260-1274.
Do investment disputes lead to lower foreign direct investment (FDI)? Recent studies argue that disputes make potential investors view the host country as riskier. Yet, a dispute, which reflects economic harm to the disputing firm, may signal new economic opportunities to firms hoping to enter the same industry. The competing pressures of risk and reward mean that the impact of disputes on FDI is ex ante unclear. However, we argue that the balance of risk and reward varies across industries. Specifically, we expect that rewards are increasing as a function of industry fixed costs. We test our hypothesis using new data on industry-level greenfield FDI between countries from 2003 to 2015. We find that a co-industrial dispute reduces investment in industries with low fixed asset intensity but not high fixed asset intensity. Overall, the results highlight the importance of theory and data that allow for heterogeneity of investors.
Extractive foreign direct investment (FDI) constitutes a large share in the total value of global FDI. Yet, mines are vulnerable to insurgent attacks, and it has been argued that these investments may promote civil conflict. This paper uses georeferenced data on armed conflicts between 1998 and 2010 in the vicinity of 6,222 mining facilities to investigate the relationship between extractive FDI and armed conflict. I find that foreign ownership has a restraining effect on armed conflicts in regions where mining facilities are located. Risks of international military intervention increase when armed groups seize foreign-owned facilities, and the expectation of foreign intervention discourages both insurgents and national governments from fighting in regions where foreign-owned mines are located. Using a difference-in-differences design with kernel-based propensity score matching, this paper shows that the fear of military intervention outweighs armed groups’ incentives to attack foreign-owned mines. The restraining effect of foreign ownership is strengthened by the military capabilities of foreign miners’ home country, while foreign miners from a former colonizer induce more armed conflicts.
Investor-state dispute settlement (ISDS) provisions have become key components in international investment treaties in protecting foreign direct investments (FDI). Although occurrences of ISDS are rare compared to the number of FDI transactions, some firms experience ISDS more frequently than the others. This study builds a game theoretic model to investigate the effect of lobbying disclosure on the pattern of ISDS and test the theory using firm-level data of Global Fortune 500 firms' lobbying and ISDS between 2000 and 2015. A firm's lobbying activity signals political influence with the US government to host governments. Host governments perceive the US intervention during an ISDS proceeding to be costly, so they adjust their policies to avoid disputes when lobbying information is available. However, firms with large lobbying efforts have an incentive to use ISDS as bargaining leverage against host governments' regulatory ambition, and their political connection is often known to host governments. Therefore, the lobbying disclosure act makes lobbying firms experience fewer ISDS, while this effect is attenuated as the volume of lobbying efforts increases. This paper exploits the exogenous shock of the Honest Leadership and Open Government Act of 2007, changing the ability of host governments to identify politically influential firms. In accordance with the theoretical expectations, the findings of this paper demonstrate how lobbying disclosure changes the number of ISDS along with corporate lobbying efforts.
"The Effect of Norm Dynamics on the Relationship between Foreign Direct Investment and Environmental Regulation." with a corresponding author, Jeonghun Min. 2019. 세계지역학회논총 (The Korean Journal of Area Studies). 37 (3): 343-363
The relationship between foreign direct investment (FDI) and host country environmental regulation has been controversial. The Pollution Haven Hypothesis assumes that countries are more likely to keep lax environmental standards to attract FDI. In contrast, the Pollution Halo Hypothesis states that more stringent environmental regulation is more attractive to multinational corporations (MNCs) which applies global environmental standards. This study seeks to provide a new bridge to fill the gap between two theories by focussing on how the normative context interacts with the behavior of MNCs. Environmental norms of a home country shape MNCs' belief about appropriate behavior. I argue that stringent environment regulations of home countries motivate corporations to act as a norm entrepreneur in host countries, while MNCs also seek for the cost-efficient way of transborder production. Hence, the stringency level of environmental standards in home countries moderates the effect of FDI on the environmental regulation of host countries. The empirical evidence from the FDI flows of 1765 country-dyads from 2005 to 2012 supports the argument. FDI from a country with higher environmental standards contributes to more stringent environmental regulation in host countries. In addition, technology level of home countries is also positively associated with the stringency level of host country environmental regulation.
There is an extensive literature on the positive impact of foreign direct investment (FDI) on host economy, but it is often inconsistent with local residents' experiences in many developing countries. We claim that the presence of FDI increases the number of protest against multinational corporations (MNCs), which becomes even greater when there are more reasons to protest and the possible repression is less likely. In addition, the heterogeneity in capital mobility shapes the expectation of repression and the outcomes of protests. In general, therefore, there will be more protests against MNCs when the corruption is high and the influential politicians provide sufficient political supports for protesters. However, if MNCs are more willing to bribe for repressing protest, increase in corruption reduces the likelihood of protest. To investigate the interaction between MNCs and host local communities, we collect the district-level data of social protests against MNCs in Liberia between 2004 and 2021. This paper employs spatial autoregressive models to address the spatial dependence between cross-sectional units. Empirical findings suggest that FDI causes more protests when the level of corruption is greater and when the senate of a county is from opposition party than governing party. We also find that when corruption is higher foreign mining facilities decrease the number of protests, while the foreign plantation farms increase protests.
Foreign firms play an important role in lobbying the US government for free trade. Their importance has risen along with foreign investment in the United States, which increases their stakes in US policies, and along with the rise in the number of foreign firms in the top ranks of multinationals. They lobby Congress and the White House in addition to USTR, the State Department, the Commerce Department, and a variety of other agencies, and they lobby about trade as well as many other policies. Lobbying responds as trade disputes increase or decrease its expected payoff in ways that are consistent with an informational theory of lobbying. Foreign firms face a liability of foreignness that reduces their incentives to lobby. As a result, firms with US affiliates respond more strongly to disputes if their home countries are closely aligned with the United States. Anti-dumping disputes generate distinct sets of incentives and patterns of lobbying.
Geoeconomics
"Preventive Restriction of FDI Outflow: The Relative Gains Problem in FDI Dyads."
with a corresponding author, Jeonghun Min. 2018. 국제관계연구 (Journal of International Politics). 23 (1): 127-154
Previous studies of foreign direct investment (FDI) concentrate on favorable investment environments to foreign investors such as political stability and economic performance of a host country. However, they fail to explain the reduction of FDI flows to a host country despite its investor-friendly conditions. This paper addresses the relative gains problem that hinders stable international cooperation due to concerns regarding the amount of which others gain. We argue that home countries adjust the amount of FDI flows as their trading partners grow powerful enough to challenge them. We examine 2744 FDI dyads from 1985 to 2012. The results of the analysis show that when the economic power gap between a FDI dyad becomes narrower, the home country reduces the amount of FDI outflows to the host country. Trade openness of the home country moderates the effect of relative gains concerns by increasing the cost of protective foreign economic policy.
Unwelcome Guests: A Firm-level Analysis of the CFIUS Review (Revision)
When there are interstate rivalries or national security concerns, host governments may limit some FDI flows. This has been illustrated by the recent political tension between the US and China. In other words, not all foreign investments are accepted by host governments, and institutional gatekeepers exist to prevent unwelcome investors. This paper argues that the gatekeepers of FDI inflows to the US can display more leniency when it aligns with their personal interests. Unpopular leaders are more likely to be consistent with their original policy stance toward FDI in order to consolidate supports from core constituents. However, popular leaders are more likely to deviate from their original manifesto since they do not need to mobilize core constituents but may want to appease opposition voters to expand supports. In addition, those gatekeepers' perception over whether a firm's home country is currently a threat to the US or not also matters. By constructing the best available transaction-level data of FDI screening in the US based on Securities and Exchange Commission (SEC) filings between 1994 and 2020, this study finds that the pattern of the CFIUS review conforms these theoretical claims.
East Asian Security
Human Security in Northeast Asia: Searching for Regional Cooperation with a corresponding author, Yongmin Kim. 2023. Open Regional Studies. 2 (1): 1-22
Given its history of regional tensions, devastating accidents and natural disasters, Northeast Asia is one of the most potentially sensitive areas in the world. As a result, the region’s countries are hard-pressed to respond quickly and adequately to human security needs, including, but not limited to, environmental, food, health, political and community security concerns. In the context of modern-day globalization, a new paradigm is needed to address these threats. This article examines several regional issues from the perspective of human security with the aim of deriving a new model for regional cooperation. The authors suggest that each country in the region set aside the realist directives currently seen in their foreign policies and, as an alternative, emphasize direct discussions between the countries’ officials and interdisciplinary activities between the respective states. New mechanisms for cooperation in this area are also discussed.