Resolving the Paradox of Social Standards and Export Competitiveness

Stephen B. DeLoach () and Jayoti Das ()

No 2008-03, Working Papers from Elon University, Department of Economics

Abstract: Over the last decade there has been increasing international pressure on countries to raise social standards (i.e., production standards based on environmental and labor conditions). Currently, the World Trade Organization does not allow countries to impose minimum standards on imports based on environmental or labor standards because it is assumed to undermine competition. There is no consensus in the empirical literature, however, to support this claim. In fact, the evidence suggests that while stronger environmental standards hurt competitiveness, stronger labor standards do the opposite. This paper offers one possible explanation for this paradox. In a simple model of incomplete information, externally-imposed standards may either increase or decrease the competitiveness of infant firms from developing countries depending on the degree of complementarity between the standard and the production of high-quality goods.

JEL-codes: F18 Q56 D82 L15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2008-02

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http://org.elon.edu/econ/WPS/wp2008-03.pdf First version, 2008 (application/pdf)

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Journal Article: Resolving the paradox of social standards and export competitiveness (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:elo:wpaper:2008-03

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