Research

Working Paper

Kubinec R, Morse A, Pandya S. Offshore Capital and Onshore Discrimination. Working Paper.

Offshore capital flows are a substantively important dimension of international capital mobility. We use leaked data on the ownership of offshore shell companies to estimate Indian firms' propensity to move capital offshore, and we examine how the propensity to offshore varies with the religious identification of a company's board members. We find that when the Bharatiya Janata Party (BJP)'s proportion of seats in a state's legislature increases by 10 percent, the proportion of Muslim-led companies that participate in offshoring declines by approximately 10 percent, while there is little if any reduction in offshoring among Hindu-led companies. We argue that this relationship is best explained by the BJP's anti-corruption initiatives and their much stronger effect on Muslim business owners compared to other ethnic and religious groups. We support this conclusion with an investigation of firm-level mechanisms and a sensitivity analysis of potential confounders.

Do investment incentives influence private firms' location decisions? We distinguish between tax incentives and incentives that require real-time government spending including job training and infrastructure. The latter can influence where firms invest by resolving information asymmetries. We evaluate how these incentives shape the location decisions of foreign firms, investors who suffer from high information asymmetries. We leverage features of the Great Recession and 2009 Recovery Act stimulus, which temporarily increased state's fiscal capacity to fund real-time incentives. During the narrow stimulus spending window, states that received more federal Medicaid stimulus  - instrumented with the exogenous component of the federal Medicaid funding formula - attracted more foreign direct investment (FDI) and increased spending on real-time incentives. During the spending window, foreign-owned manufacturing plants located in US counties that lacked a history of FDI. On average, these counties saw more real-time state incentive spending. Counties with idle industrial capacity were more likely to be new FDI recipients only if they had narrow vote margins in the prior gubernatorial election. These findings suggest that governors offered real-time incentives in counties with lower start-up costs and more swing voters. Tax incentives had no effect on FDI. These findings have important policy implications for the efficient use of investment incentives. 

Does global economic integration fuel ethnocentrism? We leverage the implied nationality of American-sounding supermarket brands to measure weekly fluctuations in local ethnocentrism following foreign acquisitions of American firms. Changes in the market share of these brands in a given store capture the local community's shifting attachment to American national identity. Foreign acquisitions are exogenous shocks that make national identity more salient to consumers but do not immediately change any other aspects of consumption. We find that the market share of American-sounding brands increases in stores located in counties where a local firm’s foreign acquisition was announced a week prior. This finding holds for acquisitions originating in the UK and Canada but no other countries; and acquisitions in some national security-sensitive industries. A placebo test with wholly domestic acquisitions verifies acquisitions more generally, and their attendant distributive consequences, do not drive our results. We establish the causal effect of global economic integration on ethnocentrism with a high external validity and using a high frequency, geographically disaggregated, behavioral measure of ethnocentrism.

Helms B, Pandya S, Sekhri S. Bartering Bureaucrats: FDI And Rent Seeking. Working Paper.

What motivates politicians to attract foreign direct investment (FDI)? Existing explanations, focused on industrialized democracies, emphasize credit claiming for economic prosperity. In many developing democracies, however, economic voting is weak. We argue that these politicians view FDI as a valuable source of rents for personal enrichment and campaign finance. We analyze a novel metric of politicians' revealed motives to attract FDI: how they allocate bureaucratic talent. We leverage India's 2005 FDI liberalization to estimate FDI's effects on transfers of Indian Administrative Service officers. We show that transfers increase in FDI-exposed districts, driven by movement of career-constrained officers, who have stronger incentives to facilitate politicians' rent seeking. We document heterogeneity consistent with rent seeking motives. Constrained bureaucrats are disproportionately appointed to powerful positions. Legislators representing FDI-exposed districts experience personal asset growth, but only when their party controls transfers. Our findings highlight how global economic integration can strengthen rent seeking motives.

Li T, Pandya S, Sekhri S. Repelling Rape: FDI Empowers Women. Working Paper.

Can global economic integration dismantle social exclusion? Integration can create new economic opportunities for marginalized social groups, but may also trigger backlash by dominant groups that reinforces exclusion. The net effect of these opposing mechanisms is unclear. We argue that foreign direct investment (FDI) produces women’s empowerment that is resilient to male backlash because it exposes women to gender equality norms. We leverage India’s 2005 FDI liberalization to identify FDI’s causal effect on women’s empowerment and rape, a violent manifestation of backlash. In FDI-exposed districts, rape declined, women’s relative wage growth doubled, and women voiced stronger support for women’s empowerment. In exposed districts women exercised household bargaining leverage and political participation in ways that increase women’s safety and deter rape. Gender equality norms are essential. FDI from low gender equality countries, which raises in- come but lacks equality norms, increases rape. We rule out several alternative mechanisms. Our findings establish a new channel through which economic integration advances social equality.

What improves women' s status and reduces rape? Washington Post/Monkey Cage April 30, 2020.

Forthcoming

Pandya S, Cian L, Venkatesan R. Grocery Shopping for America: Mitigation Strategies for Threats to National Identity. Journal of Marketing Research. Forthcoming.

Institutional threats to national identity, from within, i.e., internal threats, and from outside, i.e., external threats, affect sales of brands that are symbolic of a culture, either national or foreign. We suggest self-enchantment as a mediator and the focus on external threat as a mitigator of the adverse effects of internal threats. We test our propositions through six studies that include secondary data analyses and lab experiments. In Study 1, we analyze weekly supermarket scanner data, encompassing sales of over 8,000 brands across more than 1,100 US stores in 2004. We find that sales of American-sounding brands declined in counties that saw higher coverage of the Abu Ghraib torture scandal (internal threat) and sales of non-American-sounding brands decreased in counties with more war causalities (external threat). We use experiments in studies 2 through 4 to show that, (a) self-enchantment mediates the effect of threats on favorability toward the brand, (b) advertisements that refocus attention on how the brand helps to cope with external threats mitigate the negative effects of internal threats for American brands (c) but not for non-American brands. We adopt a multi-disciplinary methodology (qualitative, secondary data, and experimental) to triangulate the findings and ensure generalizability of the results.

Helms B, Pandya S, Venkatesan R. War on Aisle 5: Casualties, National Identity, and Consumer Behavior. Journal of Conflict Resolution . Forthcoming.

 A growing body of research argues that external threats from the international system strengthen ethnocentrism and authoritarianism, personal values anchored in national identity. We evaluate a necessary implication of this argument, that threat-driven value change manifests in broader social behaviors. Specifically, we analyze revealed value change in a non-political setting: American consumers' choice of supermarket brands that symbolize national identity. Our empirical analyses leverage US counties' quasi-random exposure to US Iraq War casualties to identify the effects of local casualties on the weekly market share growth of ``American" supermarket brands. Using weekly supermarket scanner data for a representative sample of over 1,100 US supermarkets and 8,000 brands, we find that the weekly market share of American brands grew in fallen soldiers' US hometowns. Variation in share growth across store demographics is consistent with the external threat mechanism. We rule out several alternative mechanisms including partisan cues, other product characteristics of American brands, and animosity towards other countries. These findings strengthen IR's theoretical microfoundations by showing that international politics reshapes values enough to change broader social behavior.

2018

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