In: Economics
A neoliberal globalized agenda has made specific countries less
able to control their own labor standards because they must relax
or eviscerate their own worker and labor protections in order to
attract foreign direct investment.
True
False
The answer is
True
The developing nations in the world, who are in a significant proportion, lack a critical level of industrialization. The industrialization in turn, demands capital, which is attainable via the FDI. But the investors in the FDI demands maximum returns of their investment, and the returns would be less if the labor sector is more organized and demands different standards. Firstly, the developing nations are full with labor, as their population is more. Hence, the labor unions can not be as powerfull, as they would be in a labor deficient nation. Secondly, to support more industrialization, the government would not entertain the labor organizations (unions) to be more powerfull, as they would demand a much more portion of the returns of the investment made, which is not favourable for further investment and would cause a lower flow of the FDI. This is the reason that WTO demands that the nations doesn't promote anything that reduces the FDI flow, and hence make the financial flows among the world more liberal than before.