Labor Rights and Foreign Direct Investment: Is There a Race to the Bottom?

Is Foreign Direct Investment “Gender Blind”? Women's Rights as a Determinant of US FDI

“…The mobility of transnational capital, which enables investors to locate in a wide array of host countries that may have divergent practices and standards, raises key issues about the relationship between globalization, state practices, and societal rights. A large and growing body of literature has examined the sociopolitical and institutional factors that influence foreign investment, including democratic governance (Nathan M. Jensen 2006), labor rights (Robert G. Blanton and Shannon Lindsey Blanton 2012;David Kucera 2002), and personal-integrity rights (Shannon Lindsey Blanton and Robert Blanton 2007). As many of the growth sectors of FDI, such as light manufacturing and services, rely heavily upon women's labor (Lais Abramo and Maria Valenzuela 2005;Elissa Braunstein 2006), women are particularly important in transnational production.…”

Financial Crises and Labor: Does Tight Money Loosen Labor Rights?

“…More broadly, our findings also provide insights into the complex dynamics underlying the relationship between globalization and labor rights (Blanton & Blanton, 2012;Kucera, 2002;Mosley, 2011). As is the case with other facets of the global economy, the impact of financial crises on labor rights is complex.…”

“…On a broader scale, given the mobility of capital and the urgent need to attract it in times of crisis, governments might be inclined to increase their support of corporations in an effort to retain their investment, even to the detriment of labor (Blanton & Blanton, 2012). For example, during the Asian financial crisis, market pressures "heightened the employer imperative for flexibility and cost minimization, increased employer bargaining power, and led to a decline in trade unionism and a weakening of collective bargaining" (Kim & Kim, 2003, p. 342; see also Frenkel & Peetz, 1998).…”

“…Previous research explored how domestic political institutions and political stability affect labor rights (Mosley & Uno, 2007). Others examined the effect of external factors such as trade and foreign capital (Blanton & Blanton, 2012;Kucera, 2002;Mosley, 2011), international laws and treaties (Cole, 2013), IMF and World Bank policies (Abouharb & Cingranelli, 2007;Blanton, Blanton, & Peksen, 2015) and transnational labor movements and norms (Murillo & Schrank, 2005). Other research has provided further insights into how collective bargaining groups mobilize and respond to potential threats related to globalization (Kim & Kim, 2003).…”

“…4 We also add several other covariates of labor rights in the model following the labor rights literature. We include the natural log of total trade flows as a percentage of GDP (Trade) and total foreign investment inflows as a percentage of GDP (FDI Inflows) to control the effect of international trade and foreign capital flows on labor conditions (Blanton & Blanton, 2012;Greenhill et al, 2009;Neumayer & De Soysa, 2006). The natural log of GDP per Capita controls for the assumption that labor rights abuses are more likely to be prevalent in countries with poor economic conditions (Mosley & Uno, 2007).…”