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Globalization and the Right to Free Association and Collective

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Author Info
Eric Neumayer (London School of Economics)
Indra de Soysa (Norwegian University of Science & Technology, Trondheim)

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Abstract

Economies that are more open to trade and foreign direct investment face greater competitive pressure than closed ones. Globalization critics are concerned that this pressure induces countries to lower labor standards in order to remain competitive and retain or attract foreign investment. Defenders of globalization counter that countries that are more closely integrated into global markets are likely to have higher rather than lower standards. This article tests the effect of globalization on a specific labor right, which forms part of what are commonly regarded as core or fundamental labor standards. Employing a new measure of free association and collective bargaining rights, we find that countries that are more open to trade have fewer rights violations than more closed ones. This effect holds in a global sample as well as in a developing country sub-sample and holds also when potential feedback effects are controlled via instrumental variable regression. The extent of an economy’s ‘penetration’ by foreign direct investment has no statistically significant impact. Globalization might not be beneficial for outcome-related labor standards, but it is likely to promote the process-related standard of a right to free association and collective bargaining.

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Paper provided by EconWPA in its series Labor and Demography with number 0410006.

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Date of creation: 12 Oct 2004
Date of revision: 22 Apr 2005
Handle: RePEc:wpa:wuwpla:0410006

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Related research
Keywords: trade openness; foreign direct investment; labor rights; labor standards; free association; collective bargaining;

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Find related papers by JEL classification:
J - Labor and Demographic Economics

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  2. Busse, Matthias, 2002. "Do Transnational Corporations Care About Labour Standards?," Discussion Paper Series 26298, Hamburg Institute of International Economics. [Downloadable!]
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    Other versions:
  7. Rose, Andrew K, 2002. "Do We Really Know that the WTO Increases Trade?," CEPR Discussion Papers 3538, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  8. Casella, Alessandra, 1995. "Free Trade and Evolving Standards," CEPR Discussion Papers 1204, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Drusilla K. Brown, 2001. "Labor Standards: Where Do They Belong on the International Trade Agenda?," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 89-112, Summer. [Downloadable!] (restricted)
    Other versions:
  10. Martin, Will & Maskus, Keith E, 2001. "Core Labor Standards and Competitiveness: Implications for Global Trade Policy," Review of International Economics, Blackwell Publishing, vol. 9(2), pages 317-28, May. [Downloadable!] (restricted)
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  13. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995-1), pages 1-118. [Downloadable!]
  14. Garrett, Geoffrey, 1998. "Global Markets and National Politics: Collision Course or Virtuous Circle?," International Organization, Cambridge University Press, vol. 52(04), pages 787-824, October. [Downloadable!]
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    Other versions:
  17. Stephen S. Golub, 1997. "International Labor Standards and International Trade," IMF Working Papers 97/37, International Monetary Fund.
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  21. repec:rus:hseeco:121599 is not listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Yana van der Meulen Rodgers & Gunseli Berik, 2006. "Asia's Race to Capture Post-MFA Markets: A Snapshot of Labor Standards, Compliance, and Impacts on Competitiveness," Working Paper Series, Department of Economics, University of Utah 2006_02, University of Utah, Department of Economics.
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