can anyone with a better grasp of stats than I have help with a rebuttal to
this drivel?
Anti-globalization activists have their facts wrong
JOCK FINLAYSON
Globe and Mail. Friday, January 12, 2001
Does economic globalization herald a "race to the bottom" as countries rush
to lower their environmental, labour and other regulatory standards in a bid
to attract investment from profit-hungry corporations? To listen to many
Canadian activist groups, the answer is a definite "yes." They believe that
international trade and investment harms the environment, pushes down
workers' wages, and precipitates an across-the-board lowering of social
standards in both developed and developing countries.
Evidence in support of this theory is thin. If globalization truly is
triggering a race to the bottom, then two trends should be broadly apparent.
First, countries deeply engaged in international commerce should have lower
wages and impose less demanding societal obligations on businesses than
countries that are less involved with the global economy. Second,
multinational corporations should be flocking to establish operations in
low-wage jurisdictions with feeble or non-existent standards.
Neither of these predictions is borne out by the data on trade flows,
foreign investment activity or the patterns of labour and environmental
standards found in different countries.
To begin with, there is no real evidence that openness to trade reduces
workers' incomes or labour standards. A comprehensive study by the
Organization for Economic Co-operation and Development reported that
developing countries that lowered trade barriers and stepped up their
participation in global markets tended to have higher labour standards, less
workplace discrimination, stronger trade unions and better wages.
What about the location decisions of multinational corporations? Here, too,
the data provide little support for the claims advanced by foes of
globalization. First, the vast majority -- 70 per cent or more -- of
worldwide foreign direct investment takes place not in poor countries with
low wages and standards, but in higher-wage economies such as the United
States, Britain and Canada. Second, even in the case of developing nations,
a sizable part of this investment activity is concentrated in relatively
affluent Third World regions, such as Chile, Taiwan and Singapore. Indeed,
the poorest countries often receive little or no outside investment, even
with extremely low wages and non-existent standards -- most of Africa being
a case in point.
The impact of trade on the environment has recently begun to figure in
policy discussions. Many green lobbyists argue that by encouraging countries
to produce for external markets, trade liberalization leads to a decline in
environmental quality. A related worry is that developing countries are
becoming "pollution havens," accelerating the degradation of their
environments.
A recent study by Brian Copeland and Werner Antweiler of the University of
British Columbia and University of Wisconsin economist Scott Taylor disputes
this view. They find that international trade results in only minor changes
in a country's pollution concentrations. After accounting for the rise in
income per person and the changes in the composition of output associated
with the growth of trade, they conclude that freer trade is actually good
for the environment. This accords with the common sense observation that
rich countries invariably boast cleaner environments. Since trade is a
principal means by which countries can become richer, it follows that
liberal trade policies should pave the way for higher environmental
standards.
There is strong evidence that openness to outside investment and foreign
trade leads to higher per capita incomes, and over time, to the adoption of
more stringent environmental and labour standards. Developing countries
hoping to improve their economic and social circumstances would therefore be
well advised to ignore the advice offered by today's hordes of
anti-globalization activists.
Jock Finlayson is the vice-president of policy at the Business Council of
British Columbia.
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