The Globalization of Production, Industrial Upgrading, and Collective Labor Rights in the Global South

Abstract

The impact of globalization on the enactment and practice of collective labor rights (CLR) in the global South remains a contested issue in the global political economy literature. Some scholars suggest southern firms and states suppress CLR to maintain global competitiveness in labor-intensive manufacturing. Other scholars contend that globalization improves CLR as globally integrated firms increasingly “upgrade” to more capital- and skill-intensive manufacturing. This study empirically adjudicates these claims by examining whether the integration of southern firms into global production networks indirectly affects CLR through the skill upgrading of the industrial labor force. I test this proposition using unbalanced panel data on collective labor laws and practices in 55 low- and middle-income countries from 1985 to 2002. Estimates from generalized path models show that greater manufacturing exports to northern countries and inward foreign direct investment stock are directly associated with a decrease in collective labor practices net of institutional, political, and macroeconomic conditions. Most importantly, I find that manufacturing exports indirectly reduce collective labor practices by decreasing the skill composition of the industrial labor force. Overall, this study provides novel evidence that the globalization of production directly reduces collective labor practices in the global South and indirectly reduces these practices through hindering skill development in industrial labor.