Capital Racing to the Top
8 June 2006
The Editor, New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Altha Cravey invokes the mythical "race to the bottom" to justify western college-students' protests against sweatshops (Letters, June 8). But as Dartmouth economist Douglas Irwin notes, "Several studies have failed to find a strong relationship between measures of labor standards and ... direct investment flows (such as whether countries with low standards attract more foreign investment)."*
Indeed, if there really were a race to the bottom, the United States would likely not receive so much foreign direct investment - $95.9 billion in 2004. This is about $325 per capita in the U.S., nearly ten times larger than, for example, the $34 of per capita foreign direct investment in Indonesia and more than 23 times larger than the $13.85 of per capita foreign direct investment in sub-Saharan Africa.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
* Douglas A. Irwin, Free Trade Under Fire, 2nd ed. (Princeton University Press, 2005), pp. 192-193.
The Editor, New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Altha Cravey invokes the mythical "race to the bottom" to justify western college-students' protests against sweatshops (Letters, June 8). But as Dartmouth economist Douglas Irwin notes, "Several studies have failed to find a strong relationship between measures of labor standards and ... direct investment flows (such as whether countries with low standards attract more foreign investment)."*
Indeed, if there really were a race to the bottom, the United States would likely not receive so much foreign direct investment - $95.9 billion in 2004. This is about $325 per capita in the U.S., nearly ten times larger than, for example, the $34 of per capita foreign direct investment in Indonesia and more than 23 times larger than the $13.85 of per capita foreign direct investment in sub-Saharan Africa.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
* Douglas A. Irwin, Free Trade Under Fire, 2nd ed. (Princeton University Press, 2005), pp. 192-193.
Posted by Don Boudreaux on
Friday March 23, 2007 at 10:29am