First and Last Name
Professor
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July 20, 2021
International Political Economy
Globalization has not always resulted in positive outcomes. Various adverse effects abound regarding environmental repercussions of increased global production, deteriorating labor standards in various countries, and human rights abuses of all forms. These adverse effects establish a race to the bottom regarding crucial issues in contemporary economic factors. States need to take proactive steps to ensure that effective policies exist within their borders, which are not affected by influences from multinationals anti-competitive stunts.
Multinationals use various methods to gain entry into countries whose regulations forbid unfavorable trade practices. Lacking alternative entry points through countries with stringent protective measures to the environment and labor standards in the country, multinational approach neighboring countries whose laws and regulations are accommodative of their improper trade and manufacturing practices (Drezner para. 1). For instance, a country with a strict policy on plastics may be unattractive to some Chinese plastic manufacturers, which have been proven to use unsustainable manufacturing methods. Moreover, nations with strict minimum wage policies or other strict labor laws may be unattractive to companies seeking the lowest production costs to maximize profits. Accordingly, the multinationals engaged in these unethical trade practices approach neighboring countries, mostly developing nations ready to accept their unsustainable trade practices.
The counties left out of trade activities face significant trade imbalances, especially because their manufacturing abilities remain unexploited. This scenario is especially so where the country does not enjoy an abundance of natural resources (Drezner para. 8). Most developing nations have export processing zones, which are specifically designed to attract foreign direct investment, usually in manufacturing. Regulatory standards in these zones are influenced by internal policy debate, but also, and more significantly, the multinationals (Drezner para. 10). Once poorer nations suffer due to strict laws inhibiting multinational operations, there are likely to loosen their restrictions to attract revenues and maintain their tax bases. Accordingly, labor standards may deteriorate, and environmental conservation may become less of a priority.
Political actors in various countries, including policymakers and local politicians, also affect policy debates significantly. Some of these actors are easily persuaded through corrupt deals and kickbacks from unethical manufacturing practices (Drezner para. 8). Accordingly, counties that exert unrelenting control over the manufacturing processes in their countries lack the motivation to uphold these policies to participate in the trade. Less stringent rules facilitate the race to the bottom, where countries allowing improper manufacturing and production processes suffer in the long run.
Avoiding this predicament requires countries to exert maximum control over the productive sectors in their economies. This control includes ensuring all actors, including political actors and multinationals, maintain ethical standards in their policy debates and implementation. This stance may result in lower trade in the short-term but would certainly protect the environment and maintain favorable standards in the country. These factors would certainly be beneficial in the long run, especially among multinationals observing ethical production processes, including environmental protection and effective corporate social responsibilities, including respect for human rights, such as fair labor standards. Accordingly, countries should not participate in the race to the bottom. Instead, they should ensure that the enacted laws and regulations are observed keenly, sealing all loopholes for un-competitive practices and unethical manufacturing standards: this strict control would be expensive in the short-term but undoubtedly favorable long-term.
Works Cited
Drezner, Daniel. “Bottom Feeders.” Foreign Policy, 2009, www.foreignpolicy.com/2009/11/19/bottom-feeders/. Accessed 15 Nov 2020.