U.S. national security and de-globalization

Abstract Globalization, defined as trade- and FDI-related interdependence among nations, increases social welfare by transmitting managerial practices, advanced technologies, labor skills across borders. Recent declines in FDI flows have prompted scholars to speculate on the nature, magnitude, determinants of de-globalization trends. We investigate whether a U.S. national security-related foreign investment screening law, Foreign Investment National Security Act 2007 (FINSA), contributes FINSA awarded regulator known Committee United States broad new powers revise or reject acquisitions firms industries. Using difference-in-differences research design, wide variety model specifications, estimation samples spanning 1990–2016, we document post-FINSA takeovers Consistent with techno-nationalism, that takeover are concentrated research-intensive security firms. Placebo, event-time, robustness tests corroborate our results. Our empirical evidence suggests laws help explain recent trends prompts multinational enterprise managers increasingly weight political factors behind when assessing strategies.