DP15878 Local Global Watchdogs: Trade, Sourcing and the Internationalization of Social Activism

Author(s): Pamina Koenig, Sebastian Krautheim, Claudius Löhnert, Thierry Verdier
Publication Date: March 2021
Keyword(s): campaigns, Gravity, international sourcing, international trade, NGOs, Social activism
JEL(s): F12, F14, F60, L31, O35
Programme Areas: Public Economics, International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15878

International NGO campaigns against the value chains of leading firms in a diverse set of industries are a salient feature of economic globalization. What determines the patterns of the internationalization of NGO campaigns? Stylized facts obtained from recently available data containing 102532 campaigns by 4343 NGOs targeting 11429 firms from 145 countries guide our theoretical analysis. 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, i.e. bilateral trade costs between the country of the NGO, the country of the firm and the sourcing country affect campaigns. Most notably, the latter implies that by advancing the internationalization of production, falling trade costs boost the internationalization of NGO campaigns. We use our data to estimate the NGO level triadic gravity equation implied by our model and find strong support for our predictions.