Foreign Trade, Protection, and Multinational Activity in U.S. Food Processing Industries

The analytical framework of international trade and industrial organization is used to review and test some new hypotheses about the effect of foreign trade, protection, and foreign direct investment on domestic profitability of U.S. food processing industries. Though several studies have examined the relationship between market structure and performance in food processing [7, 10], they are based on an implicit assumption that the economy is closed. The extensive multinational expansion of American food processors, documented by Horst [8], and their growing dependence on foreign trade suggest that this assumption has become untenable and that the proper identification of industrial structure must account for these foreign factors.