A race to the bottom ? Employment protection and foreign direct investment ☆

  title={A race to the bottom ? Employment protection and foreign direct investment ☆},
  author={William W. Olney},
  • William W. Olney
  • Published 2011
A common critique of globalization is that it leads to a race to the bottom. This hypothesis assumes that multinationals invest in countries with lower regulatory standards and that countries competitively undercut each other’s standards in response. This paper examines both assumptions and finds evidence of the first but no support for the second. Specifically, a reduction in employment protection rules leads to an increase in foreign direct investment (FDI). Not surprisingly, changes in… CONTINUE READING
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