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The Race To the Bottom, From the Bottom

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  • Chau, Nancy H
  • Kanbur, Ravi

Abstract

The dominant perspective in discussions of labour and environmental standards and globalization is that of North-South competition and its impact on Northern standards. This Paper presents an alternative perspective, that of South-South competition to export to the North, and its impact on Southern standards. It develops a simple model of Southern competition on standards, which can begin to provide insights into some key questions. A Southern race to the bottom is possible but not inevitable. It depends intricately on the Northern demand curve, the size of big exporters relative to each other, and the relative size of the competitive fringe of small exporters – a precise and complete characterization is developed in the Paper. The Paper also analyses the effect of Northern tariffs on Southern strategic competition in standards. It is shown that Northern trade protectionism undermines Southern standards.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2687.

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Date of creation: Feb 2001
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Handle: RePEc:cpr:ceprdp:2687

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Related research

Keywords: Labour And Environmental Standards; Logconcavity And Logconvexity; Race To The Bottom; Strategic Complementarity And Substitutability; Trade Restrictions;

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References

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  1. Brown, D.K. & Dearorff, A.V. & Stern, R.M., 1993. "International Labor Standards and Trade: A Theoretical Analysis," Working Papers 333, Research Seminar in International Economics, University of Michigan.
  2. Drusilla K. Brown, 2000. "International Trade and Core Labour Standards: A Survey of the Recent Literature," OECD Labour Market and Social Policy Occasional Papers 43, OECD Publishing.
  3. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
  4. Jim Rollo & L. Alan Winters, 2000. "Subsidiarity and Governance Challenges for the WTO: Environmental and Labour Standards," The World Economy, Wiley Blackwell, vol. 23(04), pages 561-576, 04.
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Cited by:
  1. Kimberly Ann Elliott, 2003. "Labor Standards and the Free Trade Area of the Americas," Working Paper Series WP03-7, Peterson Institute for International Economics.
  2. Alejandro Donado & Klaus Wälde, 2010. "How Bad is Globalization for Labour Standards in the North?," FIW Working Paper series 059, FIW.
  3. Gunter, Bernhard G, 2004. "The social dimension of globalization : a review of the literature," ILO Working Papers 371237, International Labour Organization.
  4. Mehdi M. Chowdhury, . "Migration, Remittances and Competition in International Labour Market," Discussion Papers 09/02, University of Nottingham, CREDIT.
  5. Hur, Jung & Zhao, Laixun, 2009. "Labor standards, labor-management bargaining and international rivalry," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 259-272, August.
  6. Donado, Alejandro & Wälde, Klaus, 2012. "Globalization, trade unions and labour standards in the North," ILO Working Papers 469448, International Labour Organization.
  7. Laixun Zhao, 2006. "International Labor Standards and Southern Competition," Discussion Paper Series 193, Research Institute for Economics & Business Administration, Kobe University.
  8. Nirvikar Singh, 2004. "The Impact of International Labor Standards: A Survey of Economic Theory," International Trade 0412007, EconWPA.

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