Question

9. Do you believe that American consumers should boycott goods made by exploited workers in Less Developed Countries? Explain why this might or might not work.

Answer 1

9. Amercian Consumers boycotting goods made by exploited workers in less developed countries will not help the workers because the workers choose to work in such conditions only if the utility associated with the pay and working conditions exceed that of their next-best alternative use of time. If a boycott is done, it reduces demand for output produced in these factories will reduce the demand for labor in these economies, resulting in lower average wages for workers.

Also it is noticed that when multinationals operate their own factories in less developed countries, these firms generally offer higher wages and better working conditions than are the norm in these countries.

However there are proponents who feel boycotting is better that may be due to legitimate concerns over the well being of foreign workers.

Advocates of boycotts of items produced in sweatshop working conditions argue that these boycotts will force foreign companies to improve pay and working conditions. This argument is sometimes based on a belief that firms operating sweatshops are receiving positive economic profits as a result of the exploitation of their workers. In this case, improvement in working conditions could be made without a substantial reduction in employment.

Those in the anti-sweatshop movement also cite surveys that indicate that consumers in industrialized economies are willing to pay higher prices for products produced under better working conditions. This suggests that the adherence by firms to "codes of conduct" may allow firms in low-wage economies to pay higher wages to their workers without losing profits.