Foreign money in American politics: The influence of foreign- affiliated political action committees

During the late 1980s, record setting foreign direct investment (FDI) in U.S. real estate, industry, and banking brought concern over foreign influence into the consciousness of the American public. The PACs of U.S. subsidiaries of foreign corporations, or foreign-affiliated political action committees (FAPACs), were criticized by some individuals as pursuing the interests of foreign parent corporations. However, by law, FAPACs can only be created, supported, maintained, and directed by U.S. citizens or legal residents. After introducing a framework of foreign influence in U.S. politics, the question of whether FAPACs pursue the interests of their foreign corporate parents is explored by comparing FAPAC and USPAC campaign contributions made during the 1987-1988 election year. The central research hypothesis being explored is: when U.S. owned and foreign-affiliated corporations operate in similar environments, the same variables will be significant in predicting FAPAC and USPAC campaign contribution patterns to congressional candidates. Two decisions, the choice of a candidate and the amount of money given chosen candidates, are analyzed using logit and ordinary least squares regression tools. The differences between PAC types within industrial categories are determined in general models that include a variable designating the type of PAC owner. The variables affecting FAPAC and USPAC contributions are analyzed separately for those industries in which type of PAC owner proves significant. Contributions to incumbents are better explained by both the logit and OLS models than contributions to challengers. In all but one industry owner was found to be significant in models analyzing either the decision to give or the decision over how much money should be contributed. No patterns explaining FAPAC differences across industrial categories could be found. The conclusion is that FAPACs consider different criteria attributable to their foreign-affiliation than do USPACs when making campaign contributions. However, it is unclear whether the foreign affiliation is an added burden to FAPACs pursuing domestic interests, or an indication of FAPACs pursuing the interests of foreign parent corporations.