Abstract
This paper analyses the welfare implications for a developing country of using union legalisation as a policy instrument to attract inward foreign direct investment. While its presence may discourage a foreign multinational (MNE) from locating in the host country,unionisation is an important rent-extracting instrument for the host country. We show that if the MNE benefits from dynamic effects, the host country government may have an incentive to adopt temporary social dumping: banning the union in the short run to extract higher rents in the future. However, if the government can use a fiscal instrument in conjunction withunion legalisation, the former can circumvent the need to engage in social dumping.
Original language | English |
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Pages (from-to) | 243-259 |
Number of pages | 17 |
Journal | Journal of International Trade & Economic Development |
Volume | 9 |
Issue number | 3 |
DOIs | |
Publication status | Published - 2000 |
Keywords
- Multinationals
- Social dumping
- Labour
- standards