Racing to the Bottom or Climbing to the Top? Foreign Direct Investment and Collective Labor Rights.

This paper addresses a key issue in debates regarding economic globalization: to what extent does the internationalization of production, via foreign direct investment, lead to increased abuses of workers in developing countries? Using a new dataset on collective labor rights violations, we assess the relationship between foreign direct investment and labor rights violations in over 100 developing nations, for 1985-2000. Our focus is on the legal rights and actual capacity of workers to organize, strike, and bargain collectively. In cross-sectional time series analyses, we find that, where accumulated stocks of foreign direct investment are higher, violations of collective labor rights are greater. At the same time, though, where new flows of foreign direct investment are greater, violations of collective labor rights are smaller. We also report evidence of competition within groups of countries: labor rights violations in one country are strongly associated with labor rights violations in the region, as well as in other countries at similar levels of development. These findings suggest that the relationship between economic globalization and labor rights in developing countries is a complex one, and that it is influenced more strongly by domestic institutions and the policies of peer countries than by foreign investment. [ABSTRACT FROM AUTHOR]