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LEGU: Economic Statecraft by Other Means: The Use and Abuse of Anti-Bribery Prosecution

3:00pm - 4:00pm / Friday 26th February 2021
Type: Webinar / Category: Research
  • Admission: Free online event. Please register for zoom details.
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Speaker: Andrey Tomashevskiy, Assistant Professor, Rutgers University, Political Science

The Foreign Corrupt Practices Act (FCPA) is frequently used by the US Justice Department to prosecute both US and foreign firms for bribery in foreign host countries. Evidence increasingly shows that anti-bribery enforcement is associated with a reduction in foreign investment inflows to host countries associated with the enforcement action. The determinants of the enforcement action remain understudied, however. I argue that enforcement actions are often political in nature, operating as de-facto sanctions against targeted countries. FCPA prosecutions can thus be viewed as a tool of economic statecraft, designed to reduce FDI inflows to targeted states and enforce US foreign policy objectives. Using data on FCPA enforcement actions along with data on UN voting patterns and alliance portfolios, I find that FCPA prosecutions are more likely to be initiated against firms investing in host countries with foreign policy preferences that diverge from the US. This paper is among the first to empirically study the determinants of anti-bribery enforcement and to explicitly consider the political nature of FCPA prosecutions. These findings have broad implication for political economy research on foreign investment, economic statecraft, and US foreign policy.Please register for zoom details.