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Revenue Substitution?: How Foreign Aid Inflows Moderate the Effect of Bilateral Trade Pressures on Labor Rights
Stockholm University, Faculty of Social Sciences, Department of Political Science.
2015 (English)In: World Development, ISSN 0305-750X, E-ISSN 1873-5991, Vol. 67, 295-309 p.Article in journal (Refereed) Published
Abstract [en]

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.
Keyword [en]
trade, foreign aid, race-to-the-bottom, labor rights, revenue substitution
National Category
Political Science Economics and Business
URN: urn:nbn:se:su:diva-115274DOI: 10.1016/j.worlddev.2014.10.025ISI: 000348620000022OAI: diva2:799816


Available from: 2015-03-31 Created: 2015-03-18 Last updated: 2015-03-31Bibliographically approved

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Lim, Sijeong
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