Hyeon-Young Ro

Ph.D. Candidate, Political Science

C.V.

About Me

Hello! I am a Ph.D. candidate in Political Science at the University of Michigan.
My research focuses on domestic firms' preferences and regulations on inbound foreign direct investment (FDI). My dissertation project examines how industrial features such as economies of scale internal and external to a firm shape attitude towards restrictions on inbound FDI by domestic producers. I also analyze FDI regulations by disaggregating the types of FDI into two different entry modes: greenfield investment and cross-border mergers and acquisitions. More generally, I study how domestic special interest groups influence trade and FDI policy making.
Prior to attending the University of Michigan, I was a non-resident fellow at the Pacific Forum Young Leaders Program. I received an M.A. in Asian Studies from Georgetown University School of Foreign Service and a B.A. in Political Science and International Relations from Korea University in Seoul, South Korea.

Dissertation

Protection From FDI and Economies of Scale

Economies of scale are a characteristic feature of modern market competition. Economies of scale internal to the firm lead to industrial concentration and radical changes to industries if one firm supersedes another; external economies of scale lead to geographic concentration, and disruptive changes in location if one country's industry surpasses another's. I argue that these effects play a critical role in shaping attitudes towards restrictions on FDI by domestic producers. Industries with high internal economies of scale will pressure their government to impose higher restrictions on inbound FDI to avoid fierce new competition; industries with high external economies of scale are more likely to welcome FDI to consolidate their country as a production hub. I develop these insights in a formal model of the endogenous determination of barriers to foreign investment, and examine data on barriers to FDI across different industries in 36 OECD countries. I find evidence for both of these patterns: economies of scale are a crucial industrial feature for understanding variation in barriers to FDI across both industries and countries.

For Fair Competition Or Protectionism? Cross-border Mergers and Acquisitions and Competition Laws

Do host governments favor domestic mergers and acquisitions (M&As) over cross-border M&As? This paper explores a part in the international political economy literature that has been relatively understudied, which is the politics of M&As. I focus on competition laws (or antitrust/antimonopoly law), which governs all M&A activities to assess the level of restrictiveness on foreign firms' domestic market operation. Based on the assessment of the competition laws applied to both domestic and cross-border M&As, I argue that host governments are more likely to advocate for domestic firms' interests, and thus protect the industry against cross-border M&As. By examining 36 member states of the Organization for Economic Cooperation and Development at industry-level I find that national competition laws discourage M&As that involve foreign global parents more substantially than M&As with domestic global parent. Thus, I conclude that governments of developed countries use competition and national security regulations as ways to protect domestic firms.

FDI Regulation on Greenfield Investment vs. Cross-border Mergers and Acquisitions

In this paper, I argue that FDI regulations, which reflect the preferences of domestic firms over inward FDI, should be higher in industries with more greenfield investments and lower in industries with more cross-border mergers and acquisitions (CBM&As). While both types of FDI increases domestic market competition, the degrees in which the competition increase are different between greenfields and CBM&As. Domestic firms would prefer the type of FDI that involves no (or less) new entries and high technology spillovers. However, they would be less favorable to the type of FDI that brings more new entries without positive spillover effects. Because the former type is often the characteristics of CBM&As whereas the latter describes greenfield investment, domestic firms are more favorable to CBM&As compared to greenfields. These preferences are then transferred to higher FDI regulations imposed by the governments.

Working Papers

Security Alliances and Cross-Border Mergers and Acquisitions

with Professor Barbara Koremenos

In this paper, we argue that security alliances, especially formal defense pacts, are important determinants of cross-border mergers and acquisitions (CBM&As). We focus on the interests of two relevant actors: the host governments and foreign investors. We posit that host governments are more open to CBM&As with businesses housed in countries with which the host has a security alliance; in these cases, positive security externalities are enhanced while negative security externalities are diminished. Similarly, foreign investors target countries that have security ties with their home countries to rule out future political uncertainties. To test this theory, we develop a directed dyadic dataset of industry-level CBM&A activities of 186 countries from 1997 to 2016. The findings show that the number of M&A deals between a pair of countries are positively and significantly correlated with security treaties and that the effect is stronger under formal defense pacts. Moreover, we find that the effect of security treaties is consistently strong in pairs of OECD countries and mixed country-pairs (composed of an OECD and non-OECD. Finally, the effects of security treaties are more prominent in industries that are considered security-sensitive, like information and computer, high-technology, and transportation. The results highlight the interaction of international political economy and security studies and the importance of not studying one in isolation of the other.

Trade's Progressive Opponents (under review)

with Professor Iain Osgood

While right-wing opposition to globalization has recently come to the fore, we describe the more enduring opposition to trade of the American Left. To do so, we collect original data on thousands of groups' participation in highly organized anti-trade coalitions. The composition of these groups and associated textual evidence suggest that their motivations are mainly progressive, focused on the environment, human rights, economic justice, and reducing corporate power. We also focus on progressives' labor union allies, showing that their anti-trade activities are motivated by both progressive anti-globalization and classic protectionism. Collectively, this anti-trade alliance accounts for a majority of trade lobbying and PAC contributions among non-producer groups. We conclude that progressive anti-globalism represents the most important interest group alliance opposition to globalization in the United States. Opposition to trade from the left has no match on the right, raising questions about the durability of popular nationalist opposition to trade.