Globalization, Women’s Economic Rights and Forced Labor

Abstract

Globalization critics are concerned that increased trade openness and foreign direct investment exacerbate existing economic disadvantages of women and foster conditions for forced labor. Defenders of globalization argue instead that as countries become more open and competition intensifies, discrimination against any group, including women, becomes more difficult to sustain and is therefore likely to recede. The same is argued with respect to forced labor. This article puts these competing claims to an empirical test. We find that countries that are more open to trade provide better economic rights to women and have a lower incidence of forced labor. This effect holds in a global sample as well as in a developing country sub-sample and holds also when potential feedback effects are controlled via instrumental variable regression. The extent of an economy’s ‘penetration’ by foreign direct investment has no statistically significant impact. Globalization might weaken the general bargaining position of labor such that outcome-related labor standards might suffer. However, being more open toward trade is likely to promote rather than hinder the realization of two labor rights considered as core or fundamental by the International Labour Organization, namely the elimination of economic discrimination and of forced labor.