FDI-based Research On The Relationship Of Labor Standards And Export

Labor standards have increasingly become a great issue in the international trade in recent years and will remain to be a controversial one between developed countries and developing countries. While developed countries have taken great efforts to establish the correlation between labor standards and trade, they failed to incorporate labor standards issue into WTO agenda because of the resistance from developing countries.Developed countries argue that developing countries with low labor standards enjoy an unfair advantage in the international trade. Moreover, they point out that foreign direct investment is more likely to be attracted to the countries or regions where labor standards are relatively lower which leads to more export indirectly. Therefore, they demand that developing countries raise labor standards with the purpose of offsetting their comparative advantage. Developing countries fear that they will lose their sole advantage in the international trade if they have to raise the labor standards.Labor standards vary from country to country and it is determined by many factors including productivity as well as politics, culture and religion and so on. It is irrational for developed countries to punish those developing countries that do not comply with international labor standards. Each government aims to improve the welfare of its people, but a long journey has to be taken before it reaches the most satisfactory result. Labor standard in China is thought to be too low that some supporters in developed countries require that China raise labor standards. The low labor standard in China is compatible with the relatively lower productivity. Therefore, the labor standards should be improved compatible with the productivity instead of by force.This paper explores the correlation between labor standards and export. The literature on the relationship of labor standards and international trade comes to the conclusion that no proof supports the viewpoints of developed countries. Based on the theories of labor standard and trade, both quantified analysis and empirical analysis are applied to disclose the implied relationship between labor standards and export. Though labor standards itself covers a wide range of items, discussion of labor standards is restricted to core labor standards and certain non-core labor standard which are most debatable between developed countries and developing countries. Model analysis method is applied to core labor standards because they cannot be quantified directly and empirical analysis is applied to thenarrow-defined labor standards.The statistic relationship between labor standards and export turns out to be both significantly and positively correlated. This result is contrary to the relationship developed countries think it should be. The result indicates that labor standards will increase with the rising of export. We don't have to fear the damage it will bring to our export if the labor standards are normally raised because there exists positive correlation between labor standards and export. Developed countries try to incorporate labor standards in WTO in an effort to punish those countries that do not comply with the international labor standards. We unswervingly oppose to the trade sanctions developed countries want to take against low labor standard countries. If developed countries really want to improve the welfare of labors in developing countries, then it would be fine to allow more export from developing countries and never resort to trade sanction.Xu Yaoming(International Trade) Supervised by Prof.Xu Weimin...