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Core Labour Standards and FDI: Friends or Foes? The Case of Child Labour

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  • Sebastian Braun

Abstract

We test the often-cited hypothesis that high levels of child labour attract foreign investors. Using panel data we show the overall effect, which child labour has on foreign direct investment (FDI), to be a (small) negative one. We find strong evidence for the theoretical prediction that child labour deters FDI by slowing down economic development. Weaker evidence is provided for our theoretical prediction that child labour can discourage FDI via its impact on the availability of a skilled labour force in an economy. The data do not indicate that high levels of child labour drive down the factor share of labour, thereby increasing the attractiveness of an economy for foreign investors.

Suggested Citation

  • Sebastian Braun, 2006. "Core Labour Standards and FDI: Friends or Foes? The Case of Child Labour," SFB 649 Discussion Papers SFB649DP2006-014, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    • Handle: RePEc:hum:wpaper:sfb649dp2006-014
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    2. Elias Dinopoulos & Laixun Zhao, 2007. "Child Labor and Globalization," Journal of Labor Economics, University of Chicago Press, vol. 25(3), pages 553-579.
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    4. Burhan, Nik Ahmad Sufian & Sidek, Abdul Halim & Ibrahim, Saifuzzaman, 2016. "Eradicating the Crime of Child Labour in Africa: The Roles of Income, Schooling, Fertility, and Foreign Direct Investment," MPRA Paper 77250, University Library of Munich, Germany.
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    7. Dezső Szakály, 2013. "Technológiai háború! – Miből készülnek a modernizáció rejtett kulcsai?," Eszak-magyarorszagi Strategiai Fuzetek, Faculty of Economics, University of Miskolc, vol. 10(2), pages 32-45.
    8. Polyxeni Kechagia & Theodore Metaxas, 2021. "Are Working Children in Developing Countries Hidden Victims of Pandemics?," Social Sciences, MDPI, vol. 10(9), pages 1-18, August.
    9. Ádám Horváth & Melinda Mihály & Bálint Supka, 2013. "A foglalkoztatás fejlesztésének lehetőségei a Fehérgyarmati kistérségben," Eszak-magyarorszagi Strategiai Fuzetek, Faculty of Economics, University of Miskolc, vol. 10(2), pages 124-130.
    10. Polyxeni Kechagia & Theodore Metaxas, 2023. "Capital Inflows and Working Children in Developing Countries: An Empirical Approach," Sustainability, MDPI, vol. 15(7), pages 1-18, April.
    11. Tadashi Morita & Kouki Sugawara, 2015. "Human capital and FDI: Development process of the developing country in an overlapping generation model," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(7), pages 922-946, October.
    12. Kumar, D. Thresh & Palaniappan, Murugesan & Kannan, Devika & Shankar, K. Madan, 2014. "Analyzing the CSR issues behind the supplier selection process using ISM approach," Resources, Conservation & Recycling, Elsevier, vol. 92(C), pages 268-278.
    13. Kechagia, Polyxeni & Metaxas, Theodore, 2020. "FDI, child labor and gender issues in Sub – Saharan Africa: an empirical approach," MPRA Paper 104311, University Library of Munich, Germany.
    14. Iveta Korobaničová, 2013. "Marketing in Small and Medium Enterprises - A case study in Slovakia," Eszak-magyarorszagi Strategiai Fuzetek, Faculty of Economics, University of Miskolc, vol. 10(2), pages 82-89.
    15. Eszter Siposné Nádori, 2013. "Szegénység és boldogság-érzet területi különbségei Európában és a világon," Eszak-magyarorszagi Strategiai Fuzetek, Faculty of Economics, University of Miskolc, vol. 10(2), pages 90-99.
    16. Laura Czifra & Aranka Mészáros, 2013. "A stafétabot átadása: avagy az újabb generációk megjelenése a munkahelyeken," Eszak-magyarorszagi Strategiai Fuzetek, Faculty of Economics, University of Miskolc, vol. 10(2), pages 116-122.
    17. Natasa Urbančíková & Oto Hudec, 2013. "Unlocking Potential of Social Capital in the Border Regions," Eszak-magyarorszagi Strategiai Fuzetek, Faculty of Economics, University of Miskolc, vol. 10(2), pages 17-31.
    18. Martina Prochádzková, 2013. "Regional innovation networks from two perspectives – innovation as an essence of local development (The Case of Slovak region)," Eszak-magyarorszagi Strategiai Fuzetek, Faculty of Economics, University of Miskolc, vol. 10(2), pages 46-56.
    19. Taylor, Mark Zachary, 2007. "National innovation rates: the evidence for/against domestic institutions," MPRA Paper 10997, University Library of Munich, Germany.

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    More about this item

    Keywords

    child labour; FDI; core labour standards;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition

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