Multinational Corporations and Labor Conditions

Robert J. Flanagan

in Globalization and Labor Conditions

Published in print August 2006 | ISBN: 9780195306002
Published online September 2006 | e-ISBN: 9780199783564 | DOI:
 Multinational Corporations and Labor Conditions

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This chapter studies the effects of multinational companies on labor conditions around the world. The evidence shows that (1) the economic presence of multinationals in foreign countries is often overstated, (2) multinationals pay higher wages than host-country companies in both industrialized and developing countries, and (3) when multinationals acquire host country businesses, they institute changes in production methods and human resource management practices that raise productivity sufficiently to support higher wages. The evidence also rejects the race-to-the-bottom view that poor labor conditions attract multinational companies. Most flows of foreign direct investment occur between advanced countries with high labor standards and are influenced by market size and potential investment risk rather than labor conditions. The chapter also examines and evaluates the efficacy of corporate codes of conduct for improving labor conditions.

Keywords: corporate codes of conduct; foreign direct investment; labor standards; labor conditions; multinational companies; multinationals; race to the bottom

Chapter.  11454 words.  Illustrated.

Subjects: International Economics

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