Back السباق لأسفل Arabic Ras i'r gwaelod Welsh Race to the bottom German Carrera hacia el abismo Spanish مسابقه تا پایان کار Persian Balapan ke bawah ID 底辺への競争 Japanese 바닥으로의 경쟁 Korean Wyścig na dno Polish Guerra fiscal Portuguese
 | This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these template messages)
|
Race to the bottom is a socio-economic phrase to describe either government deregulation of the business environment or reduction in corporate tax rates, in order to attract or retain economic activity in their jurisdictions. While this phenomenon can happen between countries as a result of globalization and free trade, it also can occur within individual countries between their sub-jurisdictions (states, localities, cities).[1][2] It may occur when competition increases between geographic areas over a particular sector of trade and production.[3] The effect and intent of these actions is to lower labor rates, cost of business, or other factors (pensions, environmental protection and other externalities) over which governments can exert control.
This deregulation lowers the cost of production for businesses. Countries/localities with higher labor, environmental standards, or taxes can lose business to countries/localities with less regulation, which in turn makes them want to lower regulations in order to keep firms' production in their jurisdiction, hence driving the race to the lowest regulatory standards.[4]
- ^ Mast, Evan (2020). "Race to the Bottom? Local Tax Break Competition and Business Location". American Economic Journal: Applied Economics. 12 (1): 288–317. doi:10.1257/app.20170511. ISSN 1945-7782.
- ^ Ferrari, Alessandro; Ossa, Ralph (2023). "A quantitative analysis of subsidy competition in the U.S." Journal of Public Economics. 224. doi:10.1016/j.jpubeco.2023.104919. ISSN 0047-2727.
- ^ C.W. (27 November 2013). "Racing to the bottom". The Economist. Retrieved 15 March 2016.
But the race to the bottom operates more subtly than most people suppose. The regressions suggest that while countries do compete with each other by instituting laws that are unfriendly to workers, such competition is not that pronounced. The real problem is that countries compete by enforcing labour laws less vigorously than they might—leading to increases in violations of labour rights prescribed in local laws. Competition between countries to attract investment is less in rules than in their practical application.
- ^ "The Politics of Multinational Corporations." International Political Economy, by Thomas Oatley, 6th ed., Routledge, Taylor & Francis Group, 2019, pp. 183–207.