What does race to the bottom mean in economics?
What does race to the bottom mean in economics?
A race to the bottom refers to heightened competition between nations, states, or companies, where product quality or rational economic decisions are sacrificed in order to gain a competitive advantage or reduction in product manufacturing costs.
What is the race to the bottom hypothesis?
The debate about the ‘race to the bottom’ hypothesis focuses mainly on globalization and the entry of developing countries into the global market. The idea is that international trade and investment will turn to lower cost countries more easily when these countries become more integrated in the world economy.
Does federalism create a race to the bottom?
Federalism can trigger a race to the bottom, leading states to reduce workplace regulations and social benefits for employees; it can obstruct federal efforts to address national problems; and it can deepen economic and social disparities among states.
How does race to the bottom affect the environment?
Races to the bottom pose a threat to the environment globally. Thomas Oatley raises the example of toxic waste regulations. It is expensive to treat chemical waste, so corporations wanting to keep production costs low, may move to countries which do not require them to treat their waste before dumping it.
Could people in poor countries do to stop this race to the bottom?
Spending on social protection programs has increased in countries with a vast labor force like the Philippines, but more can be done and if other countries invested more and followed this path, they could prevent a race to the bottom, create better conditions for their workforces, and build sustainable foundations for …
Does globalisation help the poor?
Economic growth is the main channel through which globalization can affect poverty. What researchers have found is that, in general, when countries open up to trade, they tend to grow faster and living standards tend to increase. The usual argument goes that the benefits of this higher growth trickle down to the poor.
Does globalization cause poverty?
It is known and agreed that globalization and poverty share a complex relationship with globalization portrayed both as a cause of poverty and as a solution to the same problem.
What is meant by race to the bottom?
Race to the bottom refers to a phrase used in economics to describe the event of intense competition among companies, regions, or nations to become the winner and maintain the best position turning detrimental to the interest of stakeholders and competitors involved.
Is there a race to the bottom in globalization?
The debate about the ‘race to the bottom’ hypothesis focuses mainly on globalization and the entry of developing countries into the global market. The idea is that international trade and investment will turn to lower cost countries more easily when these countries become more integrated in the world economy.
Is there a race to the bottom in developing countries?
Nita Rudra has found evidence of a race-to-the-bottom in developing countries, but not in developed countries; she argues that this is due to the elevated bargaining power of labor in developed countries.
What are the consequences of the race to the bottom?
If consumers confront poor quality goods or services as a result of cost cutting during the race to the bottom, the market for those goods or services could dry up. The phrase race to the bottom is often applied in the context of labor and staffing.