Trade, Aid and Collective Labor Rights in the Developing World

36 Pages Posted: 17 Jul 2012 Last revised: 17 Nov 2014

See all articles by Sijeong Lim

Sijeong Lim

University of Amsterdam - Amsterdam Institute for Social Science Research (AISSR)

Layna Mosley

University of North Carolina (UNC) at Chapel Hill - Department of Political Science

Aseem Prakash

University of Washington - Department of Political Science

Date Written: 2012

Abstract

This paper investigates how foreign aid conditions the influence of bilateral trade in the diffusion of collective labor rights from developed to developing nations. Prior research suggests that developing countries ratchet up their laws pertaining to collective labor rights in response to pressures from firms, consumers and activist groups in the developed countries that purchase their exports. We posit that, although foreign aid can be used to improve human and labor rights in recipient nations via aid conditionality, foreign aid has an unintended and negative effect on the trade-related diffusion of labor laws. By providing resources to recipient governments, it reduces the trade-based political leverage of pro-labor actors located in importing countries. We hypothesize that as foreign aid increases, all else equal, developing governments are likely to be less concerned about the economic benefits of trade and, therefore, less responsive to trade- based pressures to improve collective labor rights.

We test our argument in a panel of 88 developing countries that have received Official Development Assistance (ODA) during the time period 1985-2002. We find that when foreign aid levels are low, bilateral trade-based pressures lead to improvement in collective labor rights. As aid levels rise, however, the bilateral-trade based effects are no longer significant. Importantly, our results hold even when we control for domestic factors such as levels of democracy, governing party ideology, and strength of labor that might affect governmental incentives towards enactment of labor laws. Our findings also hold when bilateral aid and multilateral aid are examined separately.

Suggested Citation

Lim, Sijeong and Mosley, Layna and Prakash, Aseem, Trade, Aid and Collective Labor Rights in the Developing World (2012). APSA 2012 Annual Meeting Paper, Available at SSRN: https://ssrn.com/abstract=2110907

Sijeong Lim (Contact Author)

University of Amsterdam - Amsterdam Institute for Social Science Research (AISSR) ( email )

Amsterdam Roeterseilandcampus
Nieuwe Achtergracht 166
Amsterdam, 1018 WV
Netherlands

Layna Mosley

University of North Carolina (UNC) at Chapel Hill - Department of Political Science ( email )

361 Hamilton Hall
CB#3265
Chapel Hill, NC 27599
United States
919-962-3041 (Phone)

Aseem Prakash

University of Washington - Department of Political Science ( email )

101 Gowen Hall
Box 353530
Seattle, WA 98195
United States

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