CUR - The Council on Undergraduate Research

Human Rights & the Economy: Analyzing the Impacts of Manufacturing FDI on Labor Standards

Ayah Abdelwahab, Buket Urgen, and Dr. K. Chad Clay, Department of International Affairs, University of Georgia, 202 Herty Dr, Athens, GA 30602

Foreign Direct Investment (FDI) in developing countries has proliferated with globalization. However, the impacts of such FDI, particularly on human rights, are not thoroughly understood. Two predominant narratives relating to FDI and human rights have emerged in the literature: “climb to the top” and “race to the bottom.” The former hypothesizes that FDI promotes economic growth and development that can lead to better working conditions, thus improving respect for labor rights. The latter argues that FDI can promote deregulation and weaker respect for labor standards in developing countries, as these lax standards make developing countries more attractive for foreign investment. The evidence on these theories is mixed, and there are considerable gaps in our understanding of FDI and human rights. To further understand this relationship, we are examining the impacts of manufacturing FDI on human rights, with consideration for skill-level distinctions. We hypothesize that FDI more negatively impacts lower-skilled laborers and will test this theory using novel historical data on multinational corporations' investments. This project will not only contribute to the literature examining the relationship between political economy and human rights but also assist human rights advocates and policymakers in determining which approaches are most likely to simultaneously maximize both economic outcomes and respect for labor rights.

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