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The Race to the Bottom, From the Bottom

Author

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  • Chau, Nancy H.
  • Kanbur, Ravi

Abstract

The dominant perspective in discussions of labor 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 analyzes the e®ect of Northern tari®s on Southern strategic competition in standards. It is shown that Northern trade protectionism undermines Southern standards.

Suggested Citation

  • Chau, Nancy H. & Kanbur, Ravi, 2000. "The Race to the Bottom, From the Bottom," Working Papers 127681, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudawp:127681
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    File URL: http://purl.umn.edu/127681
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. Basu, Arnab K. & Chau, Nancy H., 2001. "Market Access Rivalry and Eco-labeling Standards: Are Eco-labels Non-tariff Barriers in Disguise?," Working Papers 127662, Cornell University, Department of Applied Economics and Management.
    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, April.
    5. Goldin,Ian & Winters,L. Alan (ed.), 1995. "The Economics of Sustainable Development," Cambridge Books, Cambridge University Press, number 9780521469579, May.
    6. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Donado, Alejandro & Wälde, Klaus, 2010. "How bad is globalization for labour standards in the north?," W.E.P. - Würzburg Economic Papers 84, University of Würzburg, Chair for Monetary Policy and International Economics.
    2. 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.
    3. 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.
    4. Laixun Zhao, 2006. "International Labor Standards and Southern Competition," Discussion Paper Series 193, Research Institute for Economics & Business Administration, Kobe University.
    5. repec:ilo:ilowps:371237 is not listed on IDEAS
    6. repec:ilo:ilowps:469448 is not listed on IDEAS
    7. Kimberly Ann Elliott, 2003. "Labor Standards and the Free Trade Area of the Americas," Working Paper Series WP03-7, Peterson Institute for International Economics.
    8. 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.
    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. Laixun Zhao, 2009. "International Labour Standards and North-South Competition," The World Economy, Wiley Blackwell, vol. 32(7), pages 1091-1114, July.
    15. 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

    Keywords

    labor and environmental standards; race to the bottom; strategic complementarity and substitutability; trade restrictions; logconcavity and logconvexity.; Food Security and Poverty; F16; J38;

    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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