Foreign direct investment screening and congressional backlash politics in the United States

Abstract

This article examines a particular instance of backlash against economic globalisation – the screening of foreign direct investment in the United States. Although most foreign direct investment is welcome in the United States, specific transactions have aroused suspicion and triggered political backlash by Congress. In fact, successive episodes have reshaped the institutions through which the United States screens foreign direct investment. The recent emergence of China as a foreign investor has posed new political challenges and led to further restrictions. This article explores the circumstances that make congressional backlash to Chinese foreign direct investment more likely, or to use the language of Alter and Zürn in this Special Issue, the ‘triggers’ of congressional backlash. Our findings highlight several patterns, notably that domestic political motives are strongly associated with congressional backlash and that generally the members instigating it do not represent the district in which the investment is located.