Steve DeLoach (economics) and Tina Das (economics) recently published the article “Resolving the paradox of social standards and international competitiveness” in the latest issue of the Journal of International Trade and Economic Development.
The research stems from the work DeLoach did on his sabbatical in the spring of 2004.
Abstract
Over the last decade there has been increasing international pressure on countries to raise ‘social standards’ (i.e. production standards based on environmental and labor conditions). Currently, the World Trade Organization does not allow countries to impose minimum standards on imports based on environmental or labor standards because it is assumed to undermine competition. There is no consensus in the empirical literature, however, to support this claim. In fact, the evidence suggests that while stronger environmental standards hurt competitiveness, stronger labor standards do the opposite. This paper offers one possible explanation for this paradox. In a simple model of incomplete information, externally imposed standards may either increase or decrease the competitiveness of infant firms from developing countries depending on the degree of complementarity between the standard and the production of high-quality goods.
The Journal of International Trade and Economic Development is indexed by the Social Science Citation Index.
Link to article:
http://www.informaworld.com/smpp/content~content=a905335537~db=all~order=page