Globalization

and Regional

Economic

Integration

“Race to the

Bottom”

Submitted By: Rashid Abdullah 19323 Raja Shoaib Akber 19608 Azhar Ali 19345

Submitted to : Dr. Imranullah

IQRA University Islamabad

Race to the Bottom

• The debate on “Race to the Bottom” emerged in

United State of America in 19th century.

• Some scholars initially titled it as the race to

efficiency but later authors such as Justice Louis

Brandeis termed it as the race to bottom.

Introduction

Race to the Bottom

• It points to a situation where government

deregulates the local business and it results:

• Lowering of the labor wages

• Worsening of work environments

• MNCs not caring for the environmental

degradation.

Introduction

Globalizatio

n

Race to bottom has been intensified by globalization

and free trade. There is an intense pressure on

governments to deregulate its markets and open

them to trade (e.g. due to WTO agreements).

This however, makes developing countries and small

economies open to exploitation by the private sector

and developed nations.

Race to the Bottom

Exploitation

Multinational Companies from developed world step

in under the name of investment and exploit the

underdeveloped countries that are rich in cheap labor

and natural resources which form the raw materials

for production.

Exploitation

Unlimited exploitation of cheap

labor-power is the sole

foundation of their power to

compete.

(Karl Marx)

Exploitation 21 million people are now victims of forced

labor International Labour Organization

14.2

Forced labour exploitation

4.5

Forced sexual exploitation

2.3

State-imposed forced labour

forced labour (in millions of people)

The Asia-Pacific region accounts for

the largest number of forced laborers

in the world 11.7 million (56 per cent)

of the global total.

state-imposed forms of forced labour, for

example in prisons, or in work imposed by

the state military or by rebel armed forces

Cross-border movement is heavily

associated with forced sexual exploitation.

Forced labour is the term used by the

international community to denote situations

in which the persons involved women and

men, girls and boys are made to work

against their free will, coerced by their

recruiter or employer, for example through

violence or threats of violence.

MNCs and

Environmen

tal damages

Multinational

Corporations

Increased activity of global multinational corporations

(MNCs) often leads to a decrease in the effectiveness

and implementation of environmental policy. In several

underdeveloped countries, MNCs do not adhere to the

labor or environmental regulations. For example

McDonalds pays wages to its sales staff which is almost

half the minimum wage set by the government.

Multinational Corporations

MNCs and

Environmen

tal damages

Environmental

Damages

MNCs are criticized for irresponsible handling of

chemical wastes and dumping them in natural water

sources or underground, which contaminates the

water table and causes soil deterioration.

Environmental Damages

MNCs and

Environmen

tal damages

Environmental

Damages

The issue of industrial pollution concerns every nation on the

planet. As a result, many steps have been taken to seek

permanent solutions to the problem. Better technology is being

developed for disposal of waste and recycling as much polluted

water in the industries as possible. Organic methods are being

employed to clean the water and soil, such as using microbes

that naturally use heavy metals and waste as feed. Policies are

being pushed into place to prevent further misuse of land.

However, industrial pollution is still rampant and will take many

years to be brought under control.

Effects of Industrial

Pollution

Case

Studies

Poor

and

dangerous

working

conditions

Poor and dangerous working

conditions

Bangladesh the second largest exporter of textile after

China.

Lowest wage rate for Bangladeshi workers.

Rasied to $38 / M after protest of workers in 2010.

More than 1100 textile workers died when Rana Palaza

collapsed.

Nestle Gets Away

With Murder!

“The Baby Killer” the 1974 report by “War on Want”.

explained how multinational milk companies like Nestle were

causing infant illness and death in poor communities by

promoting bottle feeding and discouraging breast feeding.

Formula milk results in the death of millions of children each

year, reveals a USAID report.

Source – Guardian http://www.theguardian.com/sustainable-business/nestle-baby-milk-scandal-food-industry-standards

Nokia Hungary

Nokia shed off, in one go, more than its 4,000 employees around the

world, more than half of them in Hungary, ending all phone assembly

operations in Europe. In Hungary, 2,300 jobs have been reduced by

the end of this December.

The move hurts the labor market in Hungary as well as Slovakia,

where about a third of Nokia's workers have commuted from, even as

Hungary's political elite repeatedly declared the phone giant one of its

most prized investors.

Poor nations serve as e-waste

dumping ground, says United Nations

Millions of mobile phones, laptops, tablets, toys, digital

cameras and other electronic devices bought this Christmas

are destined to create a flood of dangerous “e-waste” that is

being dumped illegally in developing countries, the UN has

warned.

http://www.theguardian.com/global-development/2013/dec/14/toxic-ewaste-illegal-dumping-

developing-countries

Impacts- On

Developing Countries

• Free Trade used as a tool for exploitation by developed

nations.

• Inability of developing nations to benefit from free trade,

especially smaller economies.

• Lack of regulations in developing nations to protect labor

from exploitation, local businesses, bio-diversity and the

environment.

• Little or no recycling mechanism to counter waste produced

by industries.

• MNCs are above the law (e.g. Nestlé's formula milk kills

millions of children each year).

• Developing countries being used as dumping grounds for

hazardous waste.

Conclusion

• Corrupt governments and bad financial policies make things

worse

• IMF and WTO policies further aggravate the situation by

forcing austerity cuts and exploitative free trade policies.

The aforementioned has resulted in a race to the bottom, where developing

countries are declining in socio-economic indicators due to globalization. While

the examples of China and India are often quoted as a success story, the world

my in-large is facing many challenges that are overlooked, be it the poverty

stricken sub-Saharan Africa or the air pollution in Beijing, which is leading to a

destructive path the results of which we cannot even begin to understand.

THANK

YOU