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Trade openness, foreign direct investment and child labor

Neumayer, Eric and De Soysa, Indra (2005) Trade openness, foreign direct investment and child labor. World Development, 33 (1). pp. 43-63. ISSN 0305-750X

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Abstract

The skeptics of globalization argue that increased trade openness and foreign direct investment induce developing countries to keep labor costs low, for example by letting children work. This article argues that there are good theoretical reasons why globalization might actually have the opposite effect. We test this with various measures of child labor and provide the first analysis of foreign investment in addition to trade. We present evidence that countries that are more open towards trade and/or have a higher stock of foreign direct investment also have a lower incidence of child labor. This holds for the labor force participation rate of 10 to 14 year old children, the secondary school non-attendance rate and a count measure of economic sectors with child labor incidence as the dependent variables. Globalization is associated with less, not more, child labor.

Item Type: Article
Official URL: http://www.elsevier.com/locate/worlddev
Additional Information: Published 2005 © Elsevier Ltd. LSE has developed LSE Research Online so that users may access research output of the School. Copyright and Moral Rights for the papers on this site are retained by the individual authors and/or other copyright owners. Users may download and/or print one copy of any article(s) in LSE Research Online to facilitate their private study or for non-commercial research. You may not engage in further distribution of the material or use it for any profit-making activities or any commercial gain. You may freely distribute the URL (<http://eprints.lse.ac.uk>) of the LSE Research Online website.
Library of Congress subject classification: H Social Sciences > H Social Sciences (General)
Sets: Departments > Geography and Environment
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 18 May 2006
URL: http://eprints.lse.ac.uk/625/

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