Author: Richard M. Locke / Topic: International Political Economy

Author:: Greg Distelhorst and Richard M. Locke
Publication Date:: 12-2016
Content Type:: Research Paper
Institution:: Watson Institute for International and Public Affairs at Brown University
Abstract:: What is the relationship between trade and social institutions in the developing world? The research literature is conflicted: importing firms may demand that trading partners observe higher labor and environmental standards, or they may penalize higher standards that raise costs. This study uses new data on retailers and manufacturers to analyze how firm-level trade responds to information about social standards. Contrary to the "race to the bottom" hypothesis, it finds that retail importers reward exporters for complying with social standards. In difference-in-differences estimates from over two thousand manufacturing establishments in 36 countries, achieving compliance is associated with a 4% [1%, 7%] average increase in annual purchasing. The effect is driven largely by the apparel industry — a longterm target of anti-sweatshop social movements — suggesting that activist campaigns can shape patterns of global trade.
Topic:: International Political Economy
Political Geography:: Global Focus

Author:: Greg Distelhorst, Jens Hainmueller, and Richard M. Locke
Publication Date:: 08-2015
Content Type:: Research Paper
Institution:: Watson Institute for International and Public Affairs at Brown University
Abstract:: This study tests the hypothesis that lean manufacturing improves the social performance of manufacturers in emerging markets. We analyze an intervention by Nike Inc. to promote the adoption of lean manufacturing in its apparel supply chain across eleven developing countries. Using difference-in-differences estimates from a panel of over three hundred factories, we find that lean adoption was associated with a 15 percentage point reduction in noncompliance with labor standards that primarily reflect factory wage and work hour practices. However, we find a null effect on factory health and safety standards. This pattern is consistent with a causal mechanism that links lean to improved social performance through changes in labor relations, rather than improved management systems. These findings offer evidence that capabilitybuilding interventions may reduce social harm in global supply chains.
Topic:: International Political Economy
Political Geography:: Global Focus

Author:: Greg Distelhorst, Jens Hainmueller, and Richard M. Locke
Publication Date:: 10-2013
Content Type:: Working Paper
Institution:: Watson Institute for International and Public Affairs at Brown University
Abstract:: This paper offers the first empirical analysis of the introduction of lean manufacturing as a "capability building" strategy for improving labor standards in global supply chains. Buyer interventions to improve supplier management systems have been proposed to augment existing, and widely deemed insufficient, private regulation of labor standards, but these claims have yet to be systematically investigated. We examine Nike Inc.'s multiyear effort to promote lean manufacturing and its associated high-performance work systems in its apparel supply base across eleven developing countries. Adoption of lean manufacturing techniques produces a 15 percentage point reduction in serious labor violations, an effect that is robust to alternative specifications and an examination of pre-trends in the treatment group. Our finding contradicts previous suggestions that pressing suppliers to adopt process improvements has deleterious effects on labor conditions and highlights the importance of relational contracting and commitment-oriented approaches to improving labor standards in the developing world.
Topic:: Development, Economics, International Political Economy, International Trade and Finance, and Labor Issues
Political Geography:: India

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