Resolving the Paradox of Social Standards and Export Competitiveness
AbstractOver the last decade there has been increasing international pressure on countries to raise social standards (i.e., production standards based on environmental and labor conditions). Currently, the World Trade Organization does not allow countries to impose minimum standards on imports based on environmental or labor standards because it is assumed to undermine competition. There is no consensus in the empirical literature, however, to support this claim. In fact, the evidence suggests that while stronger environmental standards hurt competitiveness, stronger labor standards do the opposite. This paper offers one possible explanation for this paradox. In a simple model of incomplete information, externally-imposed standards may either increase or decrease the competitiveness of infant firms from developing countries depending on the degree of complementarity between the standard and the production of high-quality goods.
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Bibliographic InfoPaper provided by Elon University, Department of Economics in its series Working Papers with number 2008-03.
Length: 25 pages
Date of creation: Feb 2008
Date of revision:
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Other versions of this item:
- Stephen DeLoach & Jayoti Das, 2008. "Resolving the paradox of social standards and export competitiveness," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 17(4), pages 467-483.
- F18 - International Economics - - Trade - - - Trade and Environment
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
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