Who bears the cost of nationalism? A spatial analysis on the unintended spillover effects of boycotts

Abstract

Politically motivated boycotts aim to harm the sales of goods associated with foreign rivals, but can also harm the domestic economy if the goods are domestically produced. This paper examines the unintended effects of the 2012 Chinese boycott of Japanese cars on China's automobile supply chain. By comparing changes in employment between auto parts and non-parts industries located at various distances from Japanese joint ventures (JV), I find that auto parts manufacturers near the Japanese JVs experienced a 10%–17% reduction in employment after the boycott.