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The Race to the Bottom, from the Bottom

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  • NANCY H. CHAU
  • RAVI KANBUR

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, and demonstrates that whether a Southern race to the bottom is possible depends intricately on the Northern demand curve, the size of large exporters relative to each other and the relative size of the competitive fringe of small exporters. The possibility that Northern trade protectionism may undermine Southern standards is also examined. Copyright (c) The London School of Economics and Political Science 2006.

Suggested Citation

  • Nancy H. Chau & Ravi Kanbur, 2006. "The Race to the Bottom, from the Bottom," Economica, London School of Economics and Political Science, vol. 73(290), pages 193-228, May.
  • Handle: RePEc:bla:econom:v:73:y:2006:i:290:p:193-228
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    References listed on IDEAS

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    1. Drusilla K. Brown, 2000. "International Trade and Core Labor Standards: A Survey of the Recent Literature," Discussion Papers Series, Department of Economics, Tufts University 0005, Department of Economics, Tufts University.
    2. Goldin,Ian & Winters,L. Alan (ed.), 1995. "The Economics of Sustainable Development," Cambridge Books, Cambridge University Press, number 9780521469579, March.
    3. 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.
    4. 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.
    5. 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, April.
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    Citations

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    Cited by:

    1. Alejando Donado & Klaus Wälde, 2010. "How Bad is Globalization for Labour Standards in the North?," Working Papers 1011, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 19 Aug 2010.
    2. Laixun Zhao, 2006. "International Labor Standards and Southern Competition," Discussion Paper Series 193, Research Institute for Economics & Business Administration, Kobe University.
    3. repec:ilo:ilowps:371237 is not listed on IDEAS
    4. Basu, Arnab K. & Chau, Nancy H. & Grote, Ulrike, 2004. "On export rivalry and the greening of agriculture--the role of eco-labels," Agricultural Economics, Blackwell, vol. 31(2-3), pages 135-147, December.
    5. Bernhard G. GUNTER & Rolph HOEVEN, 2004. "The social dimension of globalization: A review of the literature," International Labour Review, International Labour Organization, vol. 143(1-2), pages 7-43, March.
    6. Sara Kahn-Nisser, 2017. "Channels of Influence: The EU and Delta Convergence of Core Labour Standards in the Eastern Neighbourhood," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(1), pages 127-143, January.
    7. repec:ilo:ilowps:469448 is not listed on IDEAS
    8. Kimberly Ann Elliott, 2003. "Labor Standards and the Free Trade Area of the Americas," Working Paper Series WP03-7, Peterson Institute for International Economics.
    9. 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.
    10. Seliger Bernhard, 2001. "Die Krise der sozialen Sicherung und die Globalisierung – Politische Mythen und ordnungspolitische Wirklichkeit," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 52(1), pages 215-238, January.
    11. Nirvikar Singh, 2004. "The Impact of International Labor Standards: A Survey of Economic Theory," International Trade 0412007, EconWPA.
    12. Mehdi M. Chowdhury, "undated". "Migration, Remittances and Competition in International Labour Market," Discussion Papers 09/02, University of Nottingham, CREDIT.
    13. Zhiqi Chen & Afshan Dar-Brodeur, 2014. "Trade and Labour Standards: Will There Be a Race to the Bottom?," Carleton Economic Papers 14-10, Carleton University, Department of Economics.
    14. Donado, Alejandro. & Wälde, Klaus., 2012. "Globalization, trade unions and labour standards in the North," ILO Working Papers 994694483402676, International Labour Organization.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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