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The Race To the Bottom, From the Bottom

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  • Kanbur, Ravi
  • Chau, Nancy H

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.

Suggested Citation

  • Kanbur, Ravi & Chau, Nancy H, 2001. "The Race To the Bottom, From the Bottom," CEPR Discussion Papers 2687, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2687
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    Cited by:

    1. Bandyopadhyay, Subhayu & Basu, Arnab K. & Chau, Nancy H. & Mitra, Devashish, 2021. "The Pro-Trade Bias of Offshoring," Working Papers 313773, Cornell University, Department of Applied Economics and Management.
    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. Anindya Bhattacharya & Debapriya Sen, 2021. "Labor policy and multinational firms: The “race to the bottom” revisited," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1515-1537, August.
    5. 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.
    6. 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.
    7. Zhiqi Chen & Afshan Dar‐Brodeur, 2020. "Trade and labour standards: Will there be a race to the bottom?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 916-948, August.
    8. Laixun Zhao, 2009. "International Labour Standards and North–South Competition," The World Economy, Wiley Blackwell, vol. 32(7), pages 1091-1114, July.
    9. 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.
    10. Yanan Li & Ravi Kanbur & Carl Lin, 2019. "Minimum Wage Competition between Local Governments in China," Journal of Development Studies, Taylor & Francis Journals, vol. 55(12), pages 2479-2494, December.
    11. 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.
    12. Bandyopadhyay, Subhayu & Basu, Arnab K. & Chau, Nancy H. & Mitra, Devashish, 2022. "On Trade Policy Preference and Offshoring Ties," IZA Discussion Papers 15782, Institute of Labor Economics (IZA).
    13. Donado, Alejandro. & Wälde, Klaus., 2012. "Globalization, trade unions and labour standards in the North," ILO Working Papers 994694483402676, International Labour Organization.
    14. Chau, Nancy H., 2016. "On sweatshop jobs and decent work," Journal of Development Economics, Elsevier, vol. 121(C), pages 120-134.
    15. Subhayu Bandyopadhyay & Arnab K. Basu & Nancy H. Chau & Devashish Mitra, 2022. "On Terms of Trade, Offshoring Ties, and the Enforcement of Trade Agreements," Working Papers 2022-039, Federal Reserve Bank of St. Louis, revised Apr 2023.
    16. 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, Department of Economics.
    17. Dimova, Ralitza, 2021. "The Political Economy of Child Labor," GLO Discussion Paper Series 816, Global Labor Organization (GLO).
    18. repec:ilo:ilowps:469448 is not listed on IDEAS
    19. Kimberly Ann Elliott, 2003. "Labor Standards and the Free Trade Area of the Americas," Working Paper Series WP03-7, Peterson Institute for International Economics.
    20. Kanbur, Ravi, 2014. "Globalization and Inequality," Working Papers 180163, Cornell University, Department of Applied Economics and Management.
    21. 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.
    22. Nirvikar Singh, 2004. "The Impact of International Labor Standards: A Survey of Economic Theory," International Trade 0412007, University Library of Munich, Germany.
    23. Mehdi M. Chowdhury, 2009. "Migration, Remittances and Competition in International Labour Market," Discussion Papers 09/02, University of Nottingham, CREDIT.

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    More about this item

    Keywords

    Labour and environmental standards; Strategic complementarity and substitutability; Logconcavity and logconvexity; Race to the bottom; Trade restrictions;
    All these keywords.

    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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