The Long Arm of the Law: Extraterritoriality and the National Implementation of Foreign Bribery Legislation

Abstract

AbstractCan the application of domestic law by bureaucracies in powerful states alter policy dynamics globally? Courts and regulatory agencies with jurisdiction over large markets routinely impose national rules to conduct transpiring outside of their physical borders. Such extraterritoriality has expanded to issues ranging from antitrust to the environment. Proponents claim that extraterritorial acts can have far-reaching international consequences, spilling over into the domestic political economy of regulation in target states. Skeptics, however, question the effects of these sanctions against internationally mobile actors. In this study, we offer the first quantitative analysis of extraterritorial intervention for global policy convergence. In particular, we construct an original time-series panel data set to test the association between extraterritorial actions by U.S. prosecutors and the national enforcement of foreign bribery regulations in target countries. Our empirical analysis finds strong statistical evidence linking extraterritoriality to national policy implementation, with jurisdictions that experienced a U.S. intervention being twenty times more likely to enforce their national rules. The findings suggest the important influence that domestic law in powerful states may have for global cooperation in general and sheds light on the key pillars of international anticorruption efforts in particular.