Race to the bottom

In the wake of increased globalization in the world, many multinational enterprises are basing their productions in poor countries to achieve low labor costs. The result of globalization is that it leads to a race to the bottom phenomenon where governments race strive to deregulate the business environment (Steger, 2013). The scenario is both advantageous and disadvantageous in terms of the impacts on both the poor and rich countries. On one hand, the poor countries achieve better living standards through employment and availability of cheaper goods through competition. On the other hand though, the rich countries are forced to weaken their environmental and labor standards in an attempt to wade off competition from the least developed countries.

Proponents of globalization point out the impacts brought by creation of jobs in the poor countries. In addition, the people in these countries have access to cheaper products since due to lower production costs. It is not just these countries that benefit but the world as a whole as global trade improves through the creation of a global market. The other advantage is that people in poor countries get exposed to current technology imported from the rich countries. However, these advantages are not achieved without a cost implication on both the poor and rich countries. The people in poor countries receive exploitative wages and poor working conditions from the multinational enterprises. In addition, the environmental conditions are disregarded to a point of utter pollution leading to unsustainable development in these countries. Further, globalization is accused of being a conduit for unaccountability as these companies have low oversight from the host governments.



Steger, M. B. (2013). Globalization: A very short introduction.


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