Working Paper: CEPR ID: DP15878
Authors: Pamina Koenig; Sebastian Krautheim; Claudius Lhnert; Thierry Verdier
Abstract: International NGO campaigns criticizing firms for infringements along their internationalized value chains are a salient feature of economic globalization. We argue that understanding the international patterns of NGO campaigns requires accounting for the geography of their targets’ economic activities. We propose a model of global sourcing and international trade in which heterogeneous NGOs campaign against heterogeneous firms in response to infringements along their international value chains. We find that campaigns are determined by a triadic gravity equation where all three bilateral trade costs matter for NGO campaigns. Importantly, the sourcing trade costs between the supplier and the firm, which do not involve the country of the NGO, shape the patterns of NGO campaigns through their effect on the sourcing decision of firms. We use recently available data on NGO campaigns to estimate our triadic gravity equation and find strong support for this prediction.
Keywords: International Trade; International Sourcing; Gravity; NGOs; Campaigns; Social Activism
JEL Codes: F12; F60; F63; L31; O35
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sourcing trade costs (ki) (F19) | likelihood of NGO campaigns (L31) |
| NGO efficiency (L31) | attractiveness of targeted firms (G34) |
| NGO campaigns (L31) | targeting of firms (L21) |
| home bias in NGO campaigns (L31) | domestic component of campaigns (D72) |
| efficiency of NGOs (L31) | targeting of less attractive firms (G34) |