3 - Inside and Out

Summary

The previous chapter sets the stage for considering the impact of multinational production on workers’ collective rights. In this chapter, I develop a set of hypotheses linking the two. My main hypotheses focus on the implications of different modes of production – directly owned versus subcontracted – for labor rights outcomes in developing nations. In addition to theorizing about the effects of international economic participation on labor-related outcomes, I also consider the impact global learning and advocacy, as well as domestic political institutions, have on labor rights. Whereas the main focus of this book is on the impact of the global economy on labor rights, I discuss the potential direct and mediating effects of the latter two factors.

The main theoretical argument I advance is that participation in the global economy has varying effects in developing countries. Some elements of global production, such as directly owned investments, are likely to promote better respect for labor rights. However, other elements of global production, particularly arm’s-length subcontracting relationships, may have negative consequences for workers as a result of the cost competition they engender. Ultimately, then, the impact of economic openness on workers’ rights will depend on how each country is integrated into the global economy, and this varies across countries and over time. Variation in multinational firms’ modes of entry will be associated with differences in firms’ attitudes toward, and practices regarding, collective labor rights. Empirically, subcontracting and high trade openness may present governments with one set of pressures, while foreign direct investment and capital market openness could expose them to a different – and perhaps contradictory – set of demands.