- Author : Jing-Lin Duanmu
- Publisher :
- Release : 2018
- ISBN :
- Pages : 42 pages
A Race to Lower Standards Labor Standards and Location Choice of Outward FDI from the BRIC Countries
Download or read book A Race to Lower Standards Labor Standards and Location Choice of Outward FDI from the BRIC Countries written by Jing-Lin Duanmu and published by . This book was released on 2018 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Scholars argue that multinational corporations tend to locate their investment in countries with lower labor standards, but empirical results are highly inconsistent. In this paper, we investigate the effect of differential labor standards on the location choice of outward greenfield foreign direct investment (FDI) from Brazil, Russia, India and China (i.e., the BRIC countries). We find robust evidence that while there is a tendency towards the attraction of FDI by lower labor standards in developed countries, such a "race" is absent in FDI directed to developing countries. Location choice is highly path dependent upon previous trading relations between the home and the host country, which hampers the MNCs' ability to arbitrage. Conversely, capital mobility at the industry level is found to intensify the race to lower standards.