Navigating the Globalization Dilemma: Democratic Pressure and the Making of U.S. Inward Foreign Direct Investment Policy in the 1970s

Abstract

Abstract:The tension between democratic institutions and the project to integrate international markets for trade and investment has been an enduring feature of the contemporary era of globalization. This article analyzes how officials in the executive branch navigated this tension in the making of inward foreign direct investment policy during the 1970s. Based on recently declassified archival sources, it traces how top officials in the Ford administration decided to establish a new interagency committee in order to appear responsive to congressional pressure and still leave its “open door” investment policy intact. Yet this measure only marked the first step in resolving their political dilemma. Lower-level functionaries then had to manage the problem of how to give the new committee the appearance of strength while also maximizing its discretion to be weak. Overall, this article contributes the first comprehensive account of both phases of the policy-making process using new archival evidence.