Back to Search Start Over

Attracting Investment: Governments' Strategic Role in Labor Rights Protection.

Authors :
Payton, Autumn Lockwood
Woo, Byungwon
Source :
International Studies Quarterly; Sep2014, Vol. 58 Issue 3, p462-474, 13p, 2 Diagrams, 5 Charts, 3 Graphs
Publication Year :
2014

Abstract

What is the relationship between respect for labor rights and foreign direct investment ( FDI)? This study explores this connection with an emphasis on the strategic role of governments in attracting FDI. We present a formal model demonstrating that governments can do so by setting the level of labor rights protection and, as a consequence, investors will choose to invest in the face of tough labor regulations or cease investing, anticipating that the costs of abiding by these regulations will be too high. The model also suggests that governments will have an incentive to implement labor regulations when enforcement costs are sufficiently low or the profits from investment are sufficiently high. Using data from developing countries across time, error correction models test the dynamic nature of these hypotheses and find support for them: strict labor laws tend to decrease inflow of FDI, but more FDI tends to encourage better labor practices. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
00208833
Volume :
58
Issue :
3
Database :
Complementary Index
Journal :
International Studies Quarterly
Publication Type :
Academic Journal
Accession number :
98285765
Full Text :
https://doi.org/10.1111/isqu.12138