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The Shanghai Effect: Do Exports to China Affect Labor Practices in Africa?

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... Other analyses suggest that this "California effect" holds for the trade-based diffusion of human rights generally (Cao, Greenhill, & Prakash, 2013). More recently, Adolph et al (2017) consider the flipside of this effect: when African countries shift their exports toward Chinese markets, they experience a limited "Shanghai effect." Deterioration in labor rights is conditional on whether trade with China displaces trade with highstandards or low-standards countries (also see Peterson et al., 2016). ...
... While China's market may present opportunities for foreign-invested firms in Vietnam, firms are unlikely to expect consumer, shareholder or government demands there for labor rights improvements; nor will they anticipate greater markups than are available in the United States (Malesky & Mosley, 2018). Indeed, to the extent that a "Shanghai effect" (Greenhill et al., 2009;Adolph et al., 2017) exists, we expect that firms may even be inclined to reduce labor standards. Moreover, because the market opportunity mechanism is more likely to affect firm behavior than the rights conditionality mechanism, we expect a greater willingness to upgrade in 2018, as compared with 2016 (when TPP was expected) and 2017 (following United States withdrawal from TPP). ...
... The sizable negative coefficient (−5.2) on the interaction of 2018 and Tariff points to a decline in willingness to spend among firms that were exposed to the tariffs, but received the China treatment in 2018. This result, which is consistently negative and significant across specifications, suggests the possibility of a "Shanghai effect," in which transacting with China might motivate a race toward the bottom in labor standards (Greenhill et al., 2009;Adolph et al., 2017). Finally, the offsetting triple interaction (13.9) indicates a much greater willingness to spend among firms that were exposed to the tariffs and received the US treatment in 2018. ...
Article
We explore and provide an empirical assessment of an important mechanism by which global markets can motivate labor‐related upgrading among developing country firms. New market opportunities, which result from exogenous shocks, can some producers to improve their treatment of workers. These improvements come because they are consistent with taking advantage of new opportunities. We focus specifically on how shifts in U.S. trade policy toward China in 2018 affect the willingness of foreign firms operating in Vietnam to engage in upgrading. Our analyses, based on surveys of firms in 2016, 2017, and 2018, suggest that firms respond significantly to changes in market opportunities, especially when they are primed to consider specific supply chain relationships. This market opportunity mechanism for upgrading contrasts with another widely used tool, in which developed country governments condition access to their markets upon improved human and labor rights outcomes. The former operates, in the short to medium term, at the firm level, while the latter seeks to effect change at the country level.
... Anecdotal evidence points to serious violations of international labour standards at Chinese investment sites in Africa (e.g. Jauch & Sakaria, 2009;Human Rights Watch, 2011;Akorsu & Cooke, 2011), and a recent study suggests a 'Shanghai Effect', whereby African countries trading with China begin to reflect comparatively low Chinese labour protection standards (Adolph, Quince, & Prakash, 2017). This paper investigates a potential alternative channel through which China may impact African labour practices, namely in their capacity as a major donor. ...
... With the rise of China as a major player in Africa, however, this perspective may need rethinking. As noted, a recent study (Adolph et al., 2017) suggests a less optimistic 'Shanghai Effect', whereby African countries trading with China begin to reflect comparatively low Chinese labour protection standards. ...
... With the rise of China as a major player in Africa, however, this perspective may, as noted, need rethinking. In a recent study Adolph et al. (2017) suggest a less optimistic 'Shanghai Effect', whereby African countries trading with China begin to reflect their low labour standards. The authors argue that China's noninterference policy implies that the Chinese government does not exert any pressure on African governments to uphold any form of labour standards, that the fact that China does not have independent labour union means that there are no activist groups to put pressure on exporters to China (or Chinese firms importing from abroad) regarding labour practices, and finally, that absent a free press, firms do not face the same kind of reputational vulnerability, even if activist groups were to protest. ...
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Chinese firms operating in Africa are often accused of violating international labour standards and not adhering with national labour laws. Considering China’s tendency to maintain control over development projects throughout the entire implementation phase, using Chinese contractors for work performed in the recipient countries, the present paper investigates whether China impacts African labour practices in their capacity as a donor. Specifically, we use a new data material allowing for systematic quantitative analysis of Chinese development finance to investigate whether Chinese development projects affect trade union involvement. Matching geo-referenced data on the subnational allocation of Chinese development projects to Africa over the 2000–2012 period with 41,902 survey respondents across 18 African countries, our estimation strategy relies on comparing the trade union involvement of individuals who live near a site where a Chinese project is being implemented at the time of the interview to those of individuals living near a site where a Chinese project will appear in the future, but where implementation had yet to be initiated at the time of the survey. The results consistently indicate that Chinese development projects – unlike the projects of other major donors – discourage trade union involvement in the local area.
... In the agriculture sector, some of the world's environmentally most problematic crops, such as oil palm and soy, are now mainly traded between Southern countries. Evidence is growing that these shifts in end markets can undermine social and environmental conditions in producer countries (Adolph, Quince, & Prakash, 2017;Kaplinsky, Terheggen, & Tijaja, 2011;Schleifer, 2016Schleifer, , 2017. Thus, from a private governance perspective, an open research question is whether voluntary social and environmental standards can gain traction in these emerging markets (Nadvi, 2014). ...
... In contrast, scholars studying social and environmental standards in the context of South-South trade point to a 'race-to-the-bottom' dynamic. For example, with reference to Vogel's 'California effect' (1995), Adolph et al. (2017) find evidence for a 'Shanghai effect'. Analyzing a panel of 49 African countries, they show how a high export dependency on China is associated with lower labor standards in producer countries. ...
... In both markets, the RSPO's uptake figures remain far behind expectations (see Figure 1 and case studies for details). The broader patterns observed in the two cases thus fit the prevailing narrative about South-South trade triggering a race-to-the-bottom in producer countries (Adolph et al., 2017;Kaplinsky et al., 2011;Schleifer, 2016Schleifer, , 2017. ...
Article
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Private governance programs are now an important source of regulation in global value chains – particularly in context of North–South trade. But can these programs play a similar role in the value chains feeding into fast-growing emerging markets like China and India? Most scholars doing research on the topic draw a pessimistic picture. They argue that the scope conditions for private sustainability governance are not yet present in these markets. Our analysis of the Roundtable on Sustainable Palm Oil – a leading non-state certification program – in China and India partially confirms this view. At the same time, however, we find that emerging markets are not a unified category. We observe that sustainable palm oil is beginning to gain momentum in China, whereas uptake in India remains much weaker. We trace this back to a number of key market conditions, which we show are more favorable in China. In addition, our analysis highlights the role of the Chinese state in creating awareness of and shaping firms’ interests in sustainable palm oil.
... The set of assumptions associated with the importing country broadly align with theories of 'trading up' or the 'California effect' (Vogel, 1995), whereby trade with developed countries can drive up standards. Clearly, with the rise of South-South trade, the concern is that there may be a so-called 'Shanghai effect' (Adolph et al., 2017), whereby trade between developing countries drives standards down. These assumptions seem sensible in theory, and have been recently reinforced through empirical study across a number of agricultural commodities (Dauvergne and Neville, 2009;Kaplinsky et al., 2011;Adolph et al., 2017;Dauvergne, 2017;Schleifer, 2016Schleifer, , 2017. ...
... Clearly, with the rise of South-South trade, the concern is that there may be a so-called 'Shanghai effect' (Adolph et al., 2017), whereby trade between developing countries drives standards down. These assumptions seem sensible in theory, and have been recently reinforced through empirical study across a number of agricultural commodities (Dauvergne and Neville, 2009;Kaplinsky et al., 2011;Adolph et al., 2017;Dauvergne, 2017;Schleifer, 2016Schleifer, , 2017. ...
Article
While there is a substantial body of research focused on the links between North-South trade and sustainable development, research on South-South trade and sustainable development is still in its infancy. Given current understandings of the drivers of sustainable development, one might expect increasing trade in agricultural commodities within the global South to have a negative impact on sustainable development opportunities. In this sense, the Ceylon tea industry presents a puzzle. Despite exporting most of its tea to Southern markets, it has been among the top performers in terms of economic, social, and environmental practices. As such, the case raises a number of questions around shifting trade patterns and their implications for sustainability outcomes. I address these questions through four propositions – three mechanisms and one condition – through which South-South trade can expand the opportunities for sustainable development. While the exact nature of sustainable development outcomes will ultimately be decided through domestic political struggles, shifts toward more equal trade can make sustainable production more likely. Overall, the analysis draws attention to nuanced ways in which end markets shape their respective value chains and how these dynamics impact the potential for actors operating at the bottom of supply chains to shape sustainability outcomes.
... Plotted points show the cumulative percent change in each budget share four years after either unemployment or real income per capita increases by one standard deviation from the mean level across states. SeeFigure 2for further details.group; seeAdolph (2013) andAdolph, Quince, and Prakash (2017) for further details and examples on constructing counterfactuals for compositional covariates. ...
Article
Because the American states operate under balanced budget requirements, increases in spending in one area typically entail equal and opposite budget cuts in other programs. The literature analysing the correlates of government spending by policy area has mostly ignored these trade-offs inherent to policymaking, failing to address one of the most politically interesting and important dimensions of fiscal policy. Borrowing from the statistical literature on compositional data, we present more appropriate and efficient methods that explicitly incorporate the budget constraint into models of spending by budget category. We apply these methods to eight categories of spending from the American states over the years 1984–2009 to reveal winners and losers in the scramble for government spending. Our findings show that partisan governments finance their distinct priorities by raiding spending items that the opposition prefers, while different political institutions, economic conditions and state demographics impose different trade-offs across the budget.
... Finally, future analysis should examine compositional trade data to determine how the types of goods a country trades, in addition to the sorts of partners that it trades with, affect its adoption of VEPs such as ISO 14001. This approach was recently introduced by Adolph et al. (2017) and applied to the diffusion of labor standards, and it is likely transferable to VEPs such as ISO 14001 as well. Specifically, it may be that ISO 14001 diffuses through trade of some goods and services at greater rates than it does through others and that, as a result, exports to countries that demand one set of goods and services produce different diffusion outcomes than exports to countries that demand another set of goods and services. ...
Article
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Scholars have consistently found that firms in developing countries adopt voluntary environmental programs (VEPs) in high numbers when their major trade partners are home to many VEP-certified firms. This reflects the following dynamic: Importers based in countries with many VEP-certified facilities demand similarly sustainable production processes from trade partners, and so exporting firms in partner countries adopt VEPs to signal their sustainable practices. Studies have identified characteristics of developing countries that make local exporting firms more likely to adopt VEPs as a signal; however, there has been little analysis as to the country-level characteristics that make importers more (or less) likely to demand VEPs from suppliers abroad, beyond having many VEP-certified firms themselves. This study considers this matter, theorizing that VEP diffusion only accompanies exporting to countries with high levels of income and education, as well as a high number of VEP-certified firms. Panel data analysis provides support for the theory, showing that developing countries only experience trade-based diffusion of ISO 14001 (a widely adopted VEP) through their exports to countries with high income and/or education levels. In contrast, exporting to countries that lack these characteristics creates no such diffusion, even where importing countries’ VEP certification levels are high. Instead, such trade produces a “stuck in the mud” effect, as developing countries’ certification levels stagnate even as those of their import partners rise.
... The country supported some countries politically and economically through its credit and grant scheme. Adolph et al., (2016) studied how the trade of African countries with China is affecting their labor; they called it The Shanghai Effect. Their study is mainly on how the exports from Africa to China are affecting labor practices in Africa. ...
... If governments increase labour repression when export competitiveness is determined by costs, we might expect them to reduce repression in the presence of pro-labour export incentives. Indeed, countries that export to places with stronger labour rights also tend to reform their labour laws (Greenhill et al, 2009;Adolph et al, 2017;Newman et al, 2018). Similarly, Vietnamese manufacturers expressed greater willingness to improve wages and working conditions in order to enter high value foreign markets (Malesky and Moseley, 2019). ...
Article
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There is a complementary relationship between export incentives and domestic activists in improving workers’ rights in global supply chains. Governments will repress labour in order to boost export competitiveness; resistance is then sporadic, ineffective, and dangerous. If governments anticipate economic rewards, they may reduce labour repression; but domestic activists must simultaneously mobilise for substantive reforms. I demonstrate this by exploiting within-case variation in Bangladesh and Vietnam, showing what happened before the introduction of export incentives; in their presence; and after they subsided. Vietnam liberalised labour laws in order to join the Trans-Pacific Partnership; and Bangladesh did likewise in order to salvage its reputation after Rana Plaza. Activists became less fearful once Bangladeshi politicians had announced reforms. They registered unions, demonstrated en masse, and secured a 77% increase in the minimum wage. In Vietnam, party reformists were crucial in persuading their conservative colleagues that TPP would help strengthen the regime’s hold on power, while pushing for genuinely independent unions. This paper explicates the synergies between export incentives and domestic mobilisation by connecting protagonists’ motivations to macro-level reforms, via process-tracing and in-depth qualitative research.
... As the emerging BRICS economies consume more and more commodities, GVCs are shifting to place economic leverage into the hands of lead firms located in these emerging economies (Gereffi 2014 conditions are in place, e.g., 'California effect' (Vogel 1998). In contrast, scholars studying social and environmental standards of South-South trade relations point to a 'race-to-thebottom' dynamic, e.g., 'Shanghai effect' (Adolph et al. 2017). ...
Thesis
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In the past two decades, the Indonesian palm oil industry has come under intense global scrutiny due to various environmental issues, from tropical deforestation to biodiversity loss. The WWF, with several global consumer goods manufacturers still rely heavily on palm oil for their products, came up with the Roundtable on Sustainable Palm Oil (RSPO) certification in 2004 as a form of voluntary, private environmental governance. After 15 years of RSPO existence, its uptake within Indonesia is somehow weak, with the RSPO only manage to certify 2.12 million hectares oil palm plantations or 13% of the total area throughout the archipelago, as of 2019. This research seeks to investigate the reasons behind it. Through combination of interviews and literature reviews, I found that the role of Indonesian producers association (GAPKI), the pull-factor of shifting export markets, and the challenges faced by smallholders play important roles in determining the success of RSPO uptake in Indonesia.
... The market in which main products are sold can affect certification decisions (Adolph et al. 2017;Newman et al. 2017), so column (3) shows the result for firms from the sample who export at least some part of their output. The estimates show a negative correlation between certification and risk for exporting firms, but the effect is not precisely determined. ...
... When a surplus of low-skilled workers exists (Rudra 2002;Milner and Rudra 2015), or when economic downturns lead to reduced demand in key consumer markets (Lim and Prakash 2017), the consequences for workers may be even more severe. These perils often are exacerbated by the domestic political situations in apparel-producing countries (Adolph et al. 2017;Mosley 2011). Countries with weak state capacity lack adequately-staffed labor or health and safety inspectorates (Piore and Schrank 2008;Schrank 2013). ...
Article
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Most research on private governance examines the design and negotiation of particular initiatives or their operation and effectiveness once established, with relatively little work on why firms join in the first place. We contribute to this literature by exploring firms’ willingness to participate in two recent, high-profile private initiatives established in the aftermath of the Rana Plaza disaster in the Bangladesh ready-made garment (RMG) sector: the Accord on Building and Fire Safety and the Alliance for Worker Safety in Bangladesh. Using novel shipment-level data from U.S. customs declarations, we generate a set of firms that were “eligible” to join these remediation initiatives. We are able to positively attribute only a minority of US RMG imports from Bangladesh to Accord and Alliance signatories. Firms with consumer-facing brands, publicly-traded firms, and those importing more RMG product from Bangladesh were more likely to sign up for the Accord and Alliance. Firms headquartered in the USA were much less likely to sign onto remediation plans, especially the Accord.
... The market in which main products are sold can affect certification decisions (Adolph et al. 2017;Newman et al. 2017), so column (3) shows the result for firms from the sample who export at least some part of their output. The estimates show a negative correlation between certification and risk for exporting firms, but the effect is not precisely determined. ...
Chapter
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This chapter investigates the scope for international private standards to play a role in reducing business risk among the small and medium enterprises in Vietnam. Business risk is measured as variability in revenue, variability in customer base, practice of making informal payments, and temporary firm closure. The results show lower levels of business risk among certified firms, especially for firms in the middle deciles of the risk distribution. This finding is robust to the use of different business risk measures. Certification also correlates negatively with risk for technologically advanced firms, as well as firms located in rural areas and northern provinces of Vietnam. The results suggest that firms could find protection from business downsides by investing in internationally recognized quality management tools.
... According to the US International Trade Commission (2014), Africa's trade with China accounted for only $6 billion in 1995, but the figure rose to over $200 billion in 2014. The trade volume is expected to rise further to a new record this year (Adolph, Quince, & Prakash, 2017). China is now leading foreign investments in Africa. ...
Chapter
This chapter explores the reasons for African countries’ low achievements in learning and knowledge gain from partnerships with China and suggests ways for improvement in gaining strategic and value-adding knowledge. We analyze 29 Africa-China partnerships in 12 countries. Based on qualitative and interview-based data, we identify the weaknesses that prevented African countries from gaining significant knowledge. We propose a juxtaposition of the strategic and institutional perspectives toward effective knowledge gain. With respect to the smiling curve and global value chain, we suggest to African partners to target higher value-adding knowledge: strategic and sophisticated. Additionally, we propose the development of an intra-Africa interconnected network for knowledge transfer and experience sharing.
... This trend is particularly pronounced in India and China, and to a lesser extent in Brazil, where a growing share of global consumption has been driven by low-income consumers; as a result, there is higher demand for low cost and little concern for product and process standards (Adolph et al., 2017;Horner & Nadvi, 2018;Kaplinsky & Farooki, 2010;Schleifer, 2016Schleifer, , 2017. Southern consumers' growing demand, whether domestic or foreign, provides an attractive target for producers, particularly those that are unable to attain the TBG threshold referred to above. ...
Article
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Recent scholarship on transnational business governance has begun to examine public-private interactions and the active role of governments. We make two key contributions that integrate and expand this literature. First, in juxtaposition to functionalist accounts, we foreground the fundamentally political and often contentious character of these interactions. As private transnational governance schemes and standards 'hit the ground', private-public interactions, we argue, are embedded in national political arenas and tied to domestic distributional struggles among competing regulatory coalitions. Building upon multiple empirical streams of research, we develop a political-strategic framework that maps the diversity of Southern government responses (substitute, adopt, repurpose, replace or reject) to transnational private governance. Our framework shows that government responses are a function of both strategic fit with domestic industrial capabilities and structures, and strength of developmental state capacity. Second, our proposed framework adopts the vantage point of Global South governments and industries, particularly how development challenges and strategic options within global value chains affect their understanding of, and responses to, transnational schemes and standards. This is an important corrective to a Northern bias in the private governance literature.
... Along those lines we find that FDI from China, an autocracy with poor human rights conditions, does not respond to human rights conditions in a manner similar to US FDI or aggregate flows of inbound FDI (i.e., Blanton & Blanton, 2007;Harm and Ursprung, 2002). We also find that democracy has a positive impact on FDI even in a case where the home country is not only non-democratic but takes a very critical view of Western attempts to encourage democratic rule in other countries (Adolph et al., 2017;Scheipers & Sicurelli, 2008). This does imply that the more pragmatic benefits of democratic institutions for firms may be generalizable across vastly different types of home countries. ...
Article
China has rapidly become one of the leading source countries for foreign direct investment (FDI), though many aspects of Chinese capital remain under examined. In this study we analyze the sociopolitical determinants of Chinese FDI, paying particular attention to the role of human rights and democracy. We hypothesize that Chinese capital is drawn to host countries with worse human rights conditions, given the lack of sensitivity that Chinese firms – particularly state-owned enterprises – have to potential “spotlighting” as well as the underdeveloped status of corporate social responsibility (CSR) practices. However, we posit that Chinese firms will be drawn to more democratic hosts due largely to experiential learning effects (negative experiences with autocratic hosts) and pragmatic advantages of investing in a state with democratic institutions. We test these hypotheses across 195 countries for the years 2005–2013, and find Chinese FDI to be negatively and significantly related to physical integrity rights and positively related to democratic institutions.
... It suggests that stakeholders in China were not as concerned about the CSR practices of firms exporting goods into their market during the period under study. This is consistent with earlier findings of unique characteristics of CSR as a management practice in China ( Moon and Shen, 2010 ) and recent evidence of declining labour standards in Africa after increasing exports to China ( Adolph et al., 2017 ). Firms that only export to China do not have levels of CSR that are different when compared to firms that only sell domestically, as shown in Table A.8 (Panel A) in the Appendix. ...
Article
We investigate the relationship between corporate social responsibility (CSR) practices of domestic Vietnamese firms and their engagement with foreign markets. We develop a measure of CSR that combines compliance with labour standards, management commitment to CSR, and corporate community related actions; and find a strong relationship between this measure and participation in international markets. Results suggest that both exporting and importing firms engage in more CSR activities. Conditional on exporting, we show that Vietnamese exporters to China are less involved in CSR related activities, and that exporters to the US engage in more community related CSR. This may reflect differences in stakeholder preferences across markets.
... In order to maximize the reputation payoff, Reilly (2012) explains that one approach for China regarding foreign assistance is to propose alternative standards of non-interference and respect for the independence, national sovereignty and identity that distinguish it from the norms promoted by developed countries. Similarly, Adolph et al. (2017) find that China's downplaying of regulations such as labour and environment protection could create a 'Shanghai Effect' whereby some counterpart countries no longer have the impetus to improve their domestic regulatory standards. Therefore, some events under this case cluster challenge Western-dominated norms and thus come under the approach of Regime Shifting. ...
Article
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What are the roles China plays and what approaches does China take to the global order? This paper goes beyond the singular and static view on the roles of states as either status quo or revisionist and introduces more subtle roles of states with multi-approaches of Status Quo, Parallel Supplement, Nested Enhancement, Regime Shifting, Competitive Regime Creation and Ideological Confrontation. After coding 1889 events from the ‘Belt and Road Portal’ and then taking eight most frequent case clusters of the BRI as representative cases, the congruence analysis leads to the main argument that China plays multiple roles of rule taker, rule reformer, rule breaker and rule innovator. The contribution is both theoretical and practical. It improves the typology of states’ approaches to the global order and helps to interpret the roles of emerging powers for the global order. By designing the BRI Index and coding the case cluster, this paper provides a new way to identify the representative case of the BRI.
... Comparable opinions have been noted across the African continent. A research of 49 African countries concluded that Chinese investments had adverse impacts on labour practices in Africa (Adolph, Quince & Prakash, 2017). Similarly, Isaksson and Kotsadam (2018) revealed the restricted freedom of labour rights and the abuse of employees in Chinese companies operating in Africa. ...
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This study examines the Chinese employer compliance with section 6 (1) of Zimbabwe's Labour Act, aimed at protecting employees' right to fair labour standards. Chinese business investments in African countries is substantial. Zimbabwe's economic development and employment creation prospects are partly attributed to the Chinese investments, with the government envisioning more strengthening of economic relations with China. Nevertheless, concerns regarding human rights abuse in Chinese-run organisations continue to be a key challenge with claims of violations of the right to fair labour standards an issue of interest in the country. The study explored the views of 14 human resource management practitioners within Chinese enterprises, exploring their experiences and perceptions regarding employer compliance to fair labour standards. The findings reflect that employer compliance with the legal provisions is a major challenge. Employees continue to experience unfair labour standards in many Chinese organisations in Zimbabwe while the role of the HR practitioners within these organisations is overlooked. There is a need to constantly conscientise Chinese investors of the country's labour laws to ensure adherence to fair labour standards.
... Some recent scholarship shows evidence along these lines. Adolph, Quince, and Prakash (2017) focus on African workers and their economic ties to China, and they find that labor rights tend to deteriorate. ...
Article
In the competition between American states for economic development, about half of American states offer lower levels of labor rights in the form of “right-to-work” (RTW) laws. RTW states often tout their advantages in competing for foreign investment, but do foreign companies really want weaker labor regulation? Many foreign firms locate production in the United States not to lower labor costs but for other reasons, such as proximity to consumers or to employ highly skilled workers, implying that differences across labor regulations within rich countries may be declining in importance. In this article, we investigate the relationship between RTW laws and greenfield foreign direct investments. In particular, we explore recent RTW changes across two states, Indiana and Michigan, controlling for national trends in foreign investment. Adopting RTW increases foreign investment in manufacturing in both states, but Michigan's RTW law is associated with gains in service-sector projects even while Indiana's is not. While RTW may attract more manufacturing, it is not enough to generate broad-based gains across the economy.
... These controls are consistent with other research on the trade-based diffusion of labour rights, approximately matchingGreenhill et al. (2009) as well asAdolph et al. (2017). ...
Article
Scholars have long debated whether trade leads to a ‘race to the bottom’ or to a ‘race to the top’ in the labour standards of developing countries. Recent literature has offered encouraging findings consistent with the latter theory: stringent labour laws diffuse from importing countries to their export partners in the developing world. This finding has advanced our understanding of trade and labour rights, but more fine-grained analysis can further clarify what sorts of bilateral trade partnerships generate diffusion. In particular, South–South trade appears not to be characterised by the competitive pressures and foreign policy norms that produce labour rights diffusion. As such, this study compares the diffusion effects of South–South trade to those of other types of trade, using data covering 104 developing countries from 1986 to 2011. Results demonstrate that South–South trade is not accompanied by diffusion of labour laws, in contrast to other types of trade. This finding has important implications: whereas empirical results in earlier work suggest that developing countries will experience labour rights betterment if they export intensively to partners with stringent labour standards, my findings clarify that this will not occur if those partners are countries of the Global South.
... Therefore, Western scholars suppose that China's Belt and Road Initiative has increased the competition in CEE because all of the countries in the region hope to become a bridge between China and Europe through this commercial project. Such fierce competition, coupled with the problem of collective action, produces the so-called Shanghai effect [52]: The practices of foreign companies in a weakened regulatory environment will spread to local companies through competitive pressure, resulting in a decline in the overall governance quality of these countries. The impact is mainly reflected in the following three aspects. ...
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The close development of the economic relations between China and Central and Eastern Europe (CEE) since 2012 has triggered the European Union’s criticism of China’s foreign policy towards Eastern European countries. The European Union believes that China’s investment growth has led to a governance crisis in CEE countries. Based on the global governance indicators of the World Bank and the outward foreign direct investment (OFDI) data of the Ministry of Commerce of China, this paper conducts a test using the panel data model and the regression discontinuity method. An imbalanced panel dataset is adopted, covering 16 CEE countries from 2000 to 2018. The empirical research results indicate that, representing a small proportion of the investment inflows to CEE countries, China is not yet able to exert a domination effect on the region, and China’s economic power is far less than the European Union’s regulatory influence. Furthermore, China’s share of the OFDI in CEE has a U-shaped effect on the regulatory quality of host countries, and the two have a mutually causal relationship. Specifically, the impact on the host country’s regulatory quality is first manifested in the Shanghai effect, and when China’s share reaches a certain level, it is manifested in the California effect. The U-shaped effect is associated with the strategic factors of CEE countries and China’s positive contribution to good global governance.
... In contrast, SWFs from Libya, Algeria, Botswana and Nigeria that do not hold such promise may encounter setbacks and challenges to their legitimacy in host countries (Sovereign Brands Survey, 2010). Similarly, investments by SWFs from less reputable countries may serve as a warning signal of potentially declining corporate governance practices in a host country (Adolph, Quince & Prakash, 2017). While Norway's SWF epitomizes the salutary outcomes of a government-owned foreign institutional investor, future work could unpack the deterring role of certain intermediaries. ...
... 1 Similarly, developing country employers may object to labor regulations not because of the burdens of compliance but because regulations render them vulnerable to harassment by corrupt officials. 2 Two papers have argued that the effects of trade on labor rights are contingent on trading partners (Greenhill et al. 2009;Adolph et al. 2017). Because of data limitations, we can only test the hypotheses implied by these theories on a subsample of employers from Latin America in 2006. ...
Article
Competing accounts of the effect of globalization on labor politics agree that firms influence regulations, but make contrasting predictions for which firms are most likely to oppose regulations. Using survey data from employers in 19,000 manufacturing firms in 82 developing countries, we examine the determinants of employers’ opinions toward labor regulation. In contrast to the predictions of optimistic theories of globalization, we find that (i) firms that export are more likely to have negative opinions toward labor regulation than those that sell domestically, and (ii) firms that receive foreign direct investment have similar views as firms that rely only on domestic capital. Further, we show that systematic differences in employers’ opinions depend on the intensity of the competitive pressures they face and their use of skilled workers. In doing so, we provide an empirically grounded account of the heterogeneous opinions of key actors in economic policymaking in developing countries.
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The existence of shadow economies is an important, yet understudied, issue for international political economy and development. This study examines how two distinct types of international economic engagement—economic openness and participation in International Monetary Fund (IMF) programs—affect the growth of shadow (informal) sectors. We theorize that increased economic openness will reduce the size of countries’ shadow sectors. More specifically, we posit that eliminating market-distorting trade barriers will decrease the incentives for shadow sector activities such as smuggling. Additionally, we posit that increased participation in global production and supply chains is likely to lead to a positive, “climb to the top” effect on states’ regulatory and labor policies that enhance the prospective benefits associated with formal sectors. Conversely, we argue that participation in IMF structural adjustment programs can lead to great shadow sector activity as IMF-imposed structural conditions might cause significant near-term economic hardship and degrade states’ regulatory capacity. The results from a panel of 145 countries from 1971 to 2012 indicate that economic openness reduces the size of the shadow economy, while participation in IMF programs is significantly related to a larger shadow economy. These findings have important implications for understanding how the divergent forms of international economic engagement might affect shadow economies.
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This article looks at the linkages between export to the European Union (EU), export to china and human rights policies. The article argues that countries that export to the EU at high rates are more likely to converge towards its policies than countries that don’t export to the EU. The article also argues that the rise of China as a significant economic actor does not undermine this process. The article tests these arguments by analysing the links between human rights protection in the EU and in China, and export to the EU and to China, on the one hand, and human rights protection in all the countries for which there are data, on the other. The results indicate that countries’ human rights policies are positively associated with the EU’s human rights policies and this association is conditioned by countries’ levels of export to the EU. The results further indicate that export to China does not undermine this pattern. The article draws conceptual and policy implications.
Article
Under what conditions does the global economy serve as a means for the diffusion of labor standards and practices? We anticipate variation among internationally engaged firms in their propensity to improve labor standards. Upgrading is most likely when a firm's products exhibit significant cross‐market differences in markups, making accessing high‐standards overseas markets particularly profitable. Additionally, upgrading is more likely when lead firms attach a high salience to labor standards. Therefore, while participation in global production induces “trading up” behaviors among firms overall, the effect strength varies across industries. We test our expectations via a survey experiment, which queries foreign firms operating in Vietnam about their willingness to invest in labor‐related upgrading. We find strong evidence for the effect of markups on upgrading choices and suggestive evidence for the saliency mechanism.
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China becomes an active global provider of financial flows in recent years, and the Western Hemisphere also received more Chinese capital. The Chinese government has a significant role behind this trend, particularly with the active participation of Chinese State Owned Enterprises (SOEs) in overseas activities. This article investigates the possible political influence behind the outward Chinese financial flows in the Latin American and the Caribbean region, through an empirical analysis of Chinese financial flows and the United Nations (UN) General Assembly (UNGA) voting alignment. Countries receiving more Chinese capital may become more dependent on China, and hence vote aligns with China in the UN. This projection of political influence should also exist when more Chinese capital flow into strategically important sectors (mainly infrastructure). In addition, the empirical analysis also tests if the Chinese influence affects the traditional political alignment between the United States and regional countries through UNGA voting. Based on the Chinese financial data from both the Ministry of Commerce and the disaggregated flow-type and the sectoral position from the AidData, a panel data analysis is adopted to test the empirical relationship from 2000 to 2015. The result showcases a political alignment between China and the Latin American and the Caribbean countries that have received increasing Chinese outward financial flows, as well as for investments in strategic sectors (infrastructure). Meanwhile, the result also suggests that Washington’s political influence in the region has not yet been diminished despite a growth of Beijing’s financial flows and influence.
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China's Belt and Road Initiative (BRI), launched in 2013, is rapidly subsuming much of China's political and economic involvement abroad. As a far‐reaching infrastructure development and investment strategy, officially involving more than 130 countries, the expansion of the BRI raises important questions about its environmental impacts and its implications for environmental governance. This article examines how China is actively and rapidly developing an institutional architecture for its envisioned “green BRI,” considering the key actors, policies, and initiatives involved in the environmental governance of the BRI. We find that the current institutional architecture of the “green BRI” relies on voluntary corporate self‐governance and a multitude of international and transnational sustainability initiatives. The effectiveness of the environmental governance of the BRI not only hinges on China's priorities and commitments, but also on the political willingness and capacity of BRI partner countries to maintain, implement, and enforce stringent environmental laws and regulations. We conclude by outlining several environmental governance challenges and an agenda for future research.
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Laws restricting foreign funding to domestically operating nongovernmen-tal organizations (NGOs) have proliferated in developing countries. This is puzzling because Western powers support the norm that NGOs are critical for democracy and development, recommend governments partner with NGOs, and sometimes use trade sanctions to encourage adherence to this norm. We examine whether rising trade with China influences the onset of NGO restrictions. China, which has emerged as an important export destination, articulates a different norm of state sovereignty over NGOs and does not sanction developing countries that enact restrictive NGO laws. Analysis of 153 developing countries from 2000-2015 finds that increasing exports to China may double the risk of NGO crackdown, but only when accompanied by declining exports to Western democracies. NGO scholars should recognize there are multiple norms about state-NGO relationship and that norm acceptance is influenced by the economic clout of the power that espouses a particular norm.
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This study examines the effect of FDI openness to China and the rest of the world (ROW) on democracy levels of African countries in the short and long terms. We propose and test the hypothesis that the nexus between FDI openness and democracy is moderated by the grabbing and helping hands of regime corruption of African countries. We argue that in the short run, FDI openness will negatively impact democracy (grabbing hand) in corrupt regimes. However, in the long run there will be a positive effect (helping hand) as the revenue spillovers from the investment projects will reach the society empowering the middle class to demand better institutional qualities. We test these theories with a unique panel dataset spanning 2003–2017. Our dataset includes gravity model and politico-economic variables not only between China and African countries but also between the ROW. Building on examples from the existing research, we test the short-run impacts with dynamic GMM model (Blundell and Bond, J Econ, 87(1):115–143, 1998), whereas we test the long-run relationships with two stage least squares fixed effects models. To account for transaction costs and endogeneity problems, in the first stage we apply instruments on openness to both China and ROW FDI. We find statistically strong yet mixed results for our expectations. While in the short-run corrupt African countries that liberalize to Chinese FDI have lower democracy levels, in the long run, the FDI openness has a positive influence. Our results are robust to alternative measurements of democracy, 3- and 5-year non-overlapping smoothed averages and exclusion of top five countries with FDI openness to China and ROW.
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A series of iridium complexes, with triplet energy levels above or below the triplet level of host polymer, were used to study the flow of excitons between the host and the dopants. The performance of phosphorescent polymer light-emitting diodes has been shown to be sensitive to the triplet energy of the dopant. When the dopant exciton level was higher than that of the host polymer, a ``backward excitation energy transfer'' occurred; hence, the photoluminescence is quenched and the device performance is poor. When the triplet energy level of the dopant was lower than that of the host polymer, the exciton is confined to the dopant site, and the device shows better performance due to this confinement.
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We examine some issues in the estimation of time-series cross-section models, calling into question the conclusions of many published studies, particularly in the field of comparative political economy. We show that the generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more. We also provide an alternative estimator of the standard errors that is correct when the error structures show complications found in this type of model. Monte Carlo analysis shows that these "panel-corrected standard errors" perform well. The utility of our approach is demonstrated via a reanalysis of one "social democratic corporatist" model.
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This study examines the relationship between foreign economic capital and the level of government respect for two types of human rights in developing countries. Two opposing schools of thought offer explanations as to what this relationship might be like. According to the liberal neoclassical school, the acceptance of liberal economic doctrine will provide positive political benefits to developing countries. The “dependency” school, on the other hand, argues that because ties between core and periphery elites give governments in developing nations an incentive to repress, human rights conditions will worsen as foreign economic penetration increases. The results of previous empirical queries into this matter have been mixed. In contrast to most studies, we focus on a broader measure of foreign economic capital, including foreign direct investment, portfolio investment, debt, and official development assistance. Using ordered logit analysis on a cross-national sample of forty-three developing countries from 1981 to 1995, we discover systematic evidence of an association between foreign economic penetration and government respect for two types of human rights, physical integrity rights and political rights and civil liberties. Of particular interest is the finding that both foreign direct investment and portfolio investment are reliably associated with increased government respect for human rights.
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Here we seek to build on our earlier research (Poe and Tate, 1994) by re-testing similar models on a data set covering a much longer time span; the period from 1976 to 1993. Several of our findings differ from those of our earlier work. Here we find statistical evidence that military regimes lead to somewhat greater human rights abuse, defined in terms of violations of personal integrity, once democracy and a host of other factors are controlled. Further, we find that countries that have experienced British colonial influence tend to have relatively fewer abuses of personal integrity rights than others. Finally, our results suggest that leftist countries are actually less repressive of these basic human rights than non-leftist countries. Consistent with the Poe and Tate (1994) study, however, we find that past levels of repression, democracy, population size, economic development, and international and civil wars exercise statistically significant and substantively important impacts on personal integrity abuse.
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Competition to attract foreign direct investment (FDI) creates opportunities for multinational enterprises (MNEs) to diffuse corporate management practices from their countries-of-origin (home countries) to countries hosting their foreign operations. We examine conditions under which MNEs transfer corporate environmental practices from home countries to host countries. Our focus is on ISO 14001, the most widely adopted voluntary environmental program in the world. We examine inward FDI stocks and ISO 14001 adoption levels for a panel of 98 countries, and a subset of 74 developing countries, for the period 1996–2002. We find support for the country-of-origin argument in that inward FDI stocks are associated with higher levels of ISO 14001 adoption in host countries only when FDI originates from home countries that themselves have high levels of ISO 14001 adoption. Countries’ ISO adoption levels are associated not with how much FDI host countries receive overall but from whom they receive it. Three implications emerge from this study: (1) FDI can become an instrument to perpetuate divergence in corporate practices across the world; (2) economic integration via FDI can create incentives for firms to ratchet up their environmental practices beyond the legal requirements of their host countries; (3) instead of racing down to match the less stringent corporate practices prevalent in developing countries, developed countries can employ FDI outflows to ratchet up corporate practices abroad given that developing countries are net recipients of developed countries’ FDI outflows.
Book
Protesters now routinely fill the streets when any large, formal meeting dealing with international economic issues takes place. They express concern about the potential social and environmental costs of globalization and want negotiators to address these issues in trade agreements and international organizations. In addition, the debate over whether and how to link labor standards to trade has led to an impasse in American trade policy for much of the past decade and has tied the hands of US trade negotiators. Proposals to "let the market do it" or "let the International Labor Organization (ILO) do it" abound, but it is less common to find any serious analysis of just how activists can galvanize consumers to demand that corporations raise labor standards in their global operations or how the ILO can become more effective.In this study, Elliott and Freeman move beyond the debate on the relative merits and risks of a social clause in trade agreements and focus on practical approaches for improving labor standards in a more integrated global economy. The authors examine both what is being done in these areas and what more needs to be done to ensure that steady and tangible progress toward universal respect for core labor standards is made. While concluding that the ILO should have primary responsibility for labor standards, the book also suggests that the WTO should consider how to address egregious and willful violations of core labor standards if they are trade related.
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[From the introduction]. In this article, we will focus on two cases in which the EU attempts to advance its values internationally. First, the EU promotes the International Criminal Court (ICC) within the framework of its Common Foreign and Security Policy (CFSP), thereby emphasizing its commitment to human rights. Secondly, the EU aims to disseminate the norm of environmental protection by supporting the Kyoto Protocol. We will provide empirical evidence that in both cases, the EU made efforts to empower Sub-Saharan African countries on three levels. The identity level seems to be most crucial in that support for both international institutions on the part of African states increases their recognition in the eyes and in the rhetoric of European officials. Second, at the knowledge level, the EU supports Sub-Saharan African states by providing legal and technical expertise in order to enable them to participate in international negotiations and to implement international agreements. Finally, the EU provides material incentives (material level) within the framework of conditionality arrangements. However, whereas the first two levels are part of the EU’s official self-portrayal, it tends to keep quiet about the provision of material incentives, since they seem to contradict its rhetoric of EU-Africa relations as a partnership on an equal footing. The reminder of this article is structured as follows: the next section is devoted to a critical discussion of the concept of normative power with a particular view to the modes of identity construction it involves. We will then move on to our case studies on the ICC (part 3) and on the Kyoto Protocol (part 4). In the fifth part, we will summarize our findings and discuss what insights the investigation of EU-Africa relations offers with respect to our understanding of the EU as a normative power.
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Income growth in Africa that is high enough to achieve the internationally agreed development goals implies a rise in the region's per capita income by the early 2020s to about Latin America's current level. The paper shows that such income growth would be associated roughly with a nine-fold increase in Africa's manufactured exports, but also with a tripling of its primary exports, which in absolute terms would account for two-thirds of the increase in the region's total exports. Focusing on the demand potential for such an increase in Africa's primary exports, the paper argues that rising global demand from sustained rapid growth in natural-resource-poor Asian countries, particularly China, provides sizeable new opportunities for Africa's primary exports. In Africa, extractive industries are poised best to benefit directly from China's rising imports, while exporters of agricultural products are more likely to benefit indirectly from rising world market prices associated with Asia's growing primary imports.
Trading data: Evaluating our assumptions. Conflict Management and Peace Science
  • K Barbieri
  • O Keshk
  • B Pollins
Barbieri, K., Keshk, O., & Pollins, B. (2009). Trading data: Evaluating our assumptions. Conflict Management and Peace Science, 26(5), 471-491.
The institutional weakness of labor unions and their formative context
  • F Gang
Gang, F. (2003). The institutional weakness of labor unions and their formative context. Society, 3(4), 81-98.
The China price: The true cost of Chinese competitive advantage
  • A Harney
Harney, A. (2008). The China price: The true cost of Chinese competitive advantage. New York: Penguin.
The atlas of economic complexity
  • R Hausmann
  • C Hildago
  • S Bustos
  • M Coscia
  • A Simoes
  • M Yildman
Hausmann, R., Hildago, C., Bustos, S., Coscia, M., Simoes, A., & Yildman, M. (2013). The atlas of economic complexity. Cambridge, MA: The MIT Press.
SUPPLEMENTARY DATA Supplementary data associated with this article can be found, in the online version
  • Appendix A
APPENDIX A. SUPPLEMENTARY DATA Supplementary data associated with this article can be found, in the online version, at http://dx.doi.org/10.1016/ j.worlddev.2016.05.009.