Trade, Foreign Direct Investment, and Immigration Policy Making in the United States

Abstract

AbstractThis article argues that immigration policy formation in the United States after 1950 can only be understood in the context of the increasing integration of world markets. Increasing trade openness has exposed firms that rely on immigrant labor to foreign competition and increased the likelihood that these firms fail. Increasing openness by other states to foreign direct investment (FDI) allowed these same firms to move production overseas. Firms' choices to close their doors or to move overseas decrease their need for labor at home, leading them to spend their political capital on issues other than immigration. Their lack of support for open immigration, in turn, allows policymakers to restrict immigration. An examination of voting behavior on immigration in the US Senate shows that the integration of world capital and goods markets has had an important effect on the politics of immigration in the United States and shows little support for existing theories of immigration policy formation. In addition to increasing one's understanding of immigration policy, this article sheds light on how trade openness and firms' choice of production location can affect their preference for other foreign economic policies as well as domestic policies such as labor, welfare, and environmental policies.