Race-to-the-Bottom Hypothesis

The race-to-the-bottom is a critique offered by those opposed to what they view as “corporate led” economic globalization. The central argument is that as capital is able to move more freely across national borders, states will be forced to compete for needed capital investment by lowering legal standards that infringe upon profitability such as environmental regulations and worker safety protections. Since states are forced to compete against one another in order to create a more business-friendly economic environment, each will seek to lower its standards below their competitors, thus setting off a downward spiral of weaker and weaker standards.

The race-to-the-bottom hypothesis gained prominence in the early 1990s as critics on the left analyzed the global implications of the rise of neoliberal policy, an economic policy ...