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GLOBALIZATION, WAGES, AND THE QUALITY OF JOBS: FIVE COUNTRY STUDIES
FDI has been linked to higher wages at the firm level and to rising wage inequality in both developed and developing countries. These results, mostly based on cross-section data, have been challenged by recent studies that use longitudinal firm-level data and suggest that after liberalization, FDI-linked firms may actually lower wages. Second, the relatively few case studies that do exist provide interesting insights but are difficult to compare across countries. The case studies that have been carried out suggest that monitoring plays a significant role in firm-level working conditions, and that code compliance can improve factory performance. Overall, however, these case studies are often difficult to compare across countries because the interactions between local policies and globalization factors are difficult to separate when looking at a subset of firms within particular countries. Third, and possibly the most important conclusion, is that very few (if any) systematic cross-country comparisons have been made of the relationship between globalization and working conditions. Few studies systematically evaluate the effects of globalization on working conditions either within or across countries. Two important exceptions are Hasan and Mitra (2003) and Flannigan (2006). The former is an eclectic collection of either theoretical or broad studies combined with four case studies. It does not provide or follow a unified, reproducible framework. Flannigan applies a consistent framework for aggregate cross-country analysis, but it does not account for demographic characteristics or within-country variations. This volume adds to this literature in two ways. First, it provides a comprehensive literature review of the current wisdom on the topic and presents a micro-based framework for analyzing globalization and working conditions in developing countries. Second, it applies this framework to five developing countries.
The Links between Globalization and Working Conditions: Concepts and Analytical Framework The goal of the framework is to provide a systematic way to analyze the link between globalization and working conditions that can be reproduced in any developing country. It proposes a three-step approach: The first step is to define “globalization.” This term tends to have various meanings depending on the background of the person using it. Defining the concept shapes the understanding of globalization’s effects on working conditions and, therefore, influences the appropriate way to study the link between them. Along the same lines, the second step is to define working conditions and place them in context within a particular country. This step is best done qualitatively by analyzing the evolution of regulations and institutions affecting working conditions. As with globalization, the chosen definition of working conditions will affect the analytical approach. The third step is to complement the qualitative analysis with a quantitative analysis of wages and measures of nonwage working conditions.
GLOBALIZATION: FROM VAGUE CONCEPT TO MEASURABLE VARIABLES The first step in understanding the way in which globalization affects working conditions in a given country is to review the aspects of globalization that have affected that country’s economy the most. For example, exports potentially have substantially different effects than imports, and FDI that produces for the domestic market has different effects than FDI that produces for export.