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Globalization and Labor Conditions$
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Robert J. Flanagan

Print publication date: 2006

Print ISBN-13: 9780195306002

Published to Oxford Scholarship Online: September 2006

DOI: 10.1093/0195306007.001.0001

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Multinational Corporations and Labor Conditions

Multinational Corporations and Labor Conditions

Chapter:
(p.118) Chapter 6 Multinational Corporations and Labor Conditions
Source:
Globalization and Labor Conditions
Author(s):

Robert J. Flanagan (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/0195306007.003.0006

This chapter studies the effects of multinational companies on labor conditions around the world. The evidence shows that (1) the economic presence of multinationals in foreign countries is often overstated, (2) multinationals pay higher wages than host-country companies in both industrialized and developing countries, and (3) when multinationals acquire host country businesses, they institute changes in production methods and human resource management practices that raise productivity sufficiently to support higher wages. The evidence also rejects the race-to-the-bottom view that poor labor conditions attract multinational companies. Most flows of foreign direct investment occur between advanced countries with high labor standards and are influenced by market size and potential investment risk rather than labor conditions. The chapter also examines and evaluates the efficacy of corporate codes of conduct for improving labor conditions.

Keywords:   corporate codes of conduct, foreign direct investment, labor standards, labor conditions, multinational companies, multinationals, race to the bottom

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