Leaders of Liberalization or Partners of Protectionism?
Multinational Firms in the Japanese Political Economy
This book examines the effects of globalization and liberalization on the politics of trade. Although many countries have opened their markets to multinational firms, there is significant variation in how these firms behave once they enter a host country. How do multinational firms’ political strategies evolve as they gain access to a host country? Why do multinational firms become leaders of liberalization in some cases but partners of protectionism in others? I argue that while broad liberalization initiatives can create constituencies among both foreign and Japanese multinational firms for further market opening, selective liberalization tends to foster protectionist interests among the few foreign firms that gain early access to an economy, leading them to work with local firms to block or slow subsequent liberalization. I test my theory through a cross-sectoral analysis of Japan, which provides a fruitful context in which to multinational firms because it was remarkably closed to the latter until a relative boom in inward foreign direct investment in the 1990s and 2000s. Drawing on qualitative and quantitative data collected from 2010 to 2018 during field research in Japan and Washington, DC, including archival material, market data, newspaper articles, direct observation, and over 150 interviews, I examine the influence of foreign multinational firms on the Japanese policymaking process across sectors and across time. Case studies of sectors such agriculture, pharmaceuticals, insurance, and information technology are nested within a broader cross-sectoral analysis. I also provide extensions of the theory to other sectors such as commercial aviation, automobiles, telecommunications, luxury goods, soft drinks, and retail. These findings contribute to the existing scholarly literature by demonstrating how trade policy shapes firms’ interests and their corresponding political strategies in ways that influence the future trajectory of not only Japan but also the global political economy. It sheds light on how globalization is reshaping the political arena in countries around the world. This research has been generously supported by the University of Hawaii at Manoa, Harvard University, the Japan Foundation, the Boren Fellowship, the University of Tokyo, Waseda University, the UC Berkeley Center for Japanese Studies, and the UC Berkeley Department of Political Science.