Revenue Substitution?: How Foreign Aid Inflows Moderate the Effect of Bilateral Trade Pressures on Labor Rights
2015 (English)In: World Development, ISSN 0305-750X, E-ISSN 1873-5991, Vol. 67, 295-309 p.Article in journal (Refereed) Published
This paper investigates how foreign aid inflows moderate bilateral trade-based pressures on the exporting countries' labor rights. Because aid provides additional resources to recipient governments, it reduces the importance aid-recipient governments attach to the preferences of their export partners. Consequently, aid inadvertently moderates the leverage exercised by importing countries on the governments of exporting, developing countries. Our analysis of a panel of 91 aid recipient countries for the period 1985-2002 lends support to the revenue substitution hypothesis. When aid levels are low, bilateral trade-based pressures are associated with improved labor rights. As aid levels rise, however, the effect loses significance.
Place, publisher, year, edition, pages
2015. Vol. 67, 295-309 p.
trade, foreign aid, race-to-the-bottom, labor rights, revenue substitution
Political Science Economics and Business
IdentifiersURN: urn:nbn:se:su:diva-115274DOI: 10.1016/j.worlddev.2014.10.025ISI: 000348620000022OAI: oai:DiVA.org:su-115274DiVA: diva2:799816