TY - JOUR T1 - A Race to Lower Standards? Labor Standards and Location Choice of Outward FDI from the BRIC Countries JF - International Business Review Y1 - 2014 A1 - Jing-Lin Duanmu KW - Brazil KW - BRIC countries KW - China KW - Greenfield foreign direct investment KW - India KW - labor standards KW - Russia AB -

Scholars argue that multinational corporations tend to locate their investment in countries with lower labor standards, but empirical results are highly inconsistent. In this paper, we investigate the effect of differential labor standards on the location choice of outward greenfield foreign direct investment (FDI) from Brazil, Russia, India and China (i.e., the BRIC countries). We find robust evidence that while there is a tendency towards the attraction of FDI by lower labor standards in developed countries, such a “race” is absent in FDI directed to developing countries. Location choice is highly path dependent upon previous trading relations between the home and the host country, which hampers the MNCs’ ability to arbitrage. Conversely, capital mobility at the industry level is found to intensify the race to lower standards.

VL - 23 L2 - eng UR - http://epubs.surrey.ac.uk/804740/1/A%20Race%20to%20Lower%20Standards.pdf CP - 3 ER -