Globalization and the Right to Free Association and Collective Bargaining: An Empirical Analysis

49 Pages Posted: 15 Oct 2004 Last revised: 15 Mar 2014

See all articles by Eric Neumayer

Eric Neumayer

London School of Economics and Political Science (LSE)

Indra De Soysa

Norwegian University of Science and Technology

Date Written: April 1, 2005

Abstract

Economies that are more open to trade and foreign direct investment face greater competitive pressure than closed ones. Globalization critics are concerned that this pressure induces countries to lower labor standards in order to remain competitive and retain or attract foreign investment. Defenders of globalization counter that countries that are more closely integrated into global markets are likely to have higher rather than lower standards. This article tests the effect of globalization on a specific labor right, which forms part of what are commonly regarded as core or fundamental labor standards. Employing a new measure of free association and collective bargaining rights, we find that countries that are more open to trade have fewer rights violations than more closed ones. This effect holds in a global sample as well as in a developing country sub-sample and holds also when potential feedback effects are controlled via instrumental variable regression. The extent of an economy's "penetration" by foreign direct investment has no statistically significant impact. Globalization might not be beneficial for outcome-related labor standards, but it is likely to promote the process-related standard of a right to free association and collective bargaining.

Keywords: Trade openness, foreign direct investment, labor rights, labor standards, free association, collective bargaining

Suggested Citation

Neumayer, Eric and De Soysa, Indra, Globalization and the Right to Free Association and Collective Bargaining: An Empirical Analysis (April 1, 2005). World Development, Vol. 34, No. 1, 2005. Available at SSRN: https://ssrn.com/abstract=604021 or http://dx.doi.org/10.2139/ssrn.604021

Eric Neumayer (Contact Author)

London School of Economics and Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 207 955 7598 (Phone)
+44 207 955 7412 (Fax)

HOME PAGE: http://personal.lse.ac.uk/neumayer

Indra De Soysa

Norwegian University of Science and Technology ( email )

Trondheim NO-7491
Norway

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