Transferability Of Child Labor Norms: Examining The Link Between Foreign Direct Investment And Child Labor Practices In Developing Countries

Why do child labor norms often fail to be transferred or enforced in developing countries even if the implementation of such norms already proved to have substantially reduced child labor practices in developed regions? In the field of international political economy, a number of studies examine how international trade in general and foreign direct investment (FDI, hereafter) in particular influence economic growth, income equality, and balance of trade in developed and developing countries. Extending the literature on international trade and investment, this thesis examines the relationship between FDI and child labor practices in developing countries. Specifically, I investigate whether and to what extent foreign direct investment influences the use of child labor in developing countries that host such investments. I argue that FDI helps decrease the use of child labor in countries that host such investments. I further argue that FDI\u27s positive externalities can be maximized when developing countries have adequate infrastructure (particularly, technology and communications), efficient institutions, and effective social programs. In addition, I also investigate the conditional effects of FDI on child labor practices by including an interaction model using FDI inflow and merchandise trade. Specifically, I argue that although increased FDI in developing countries generally leads to a reduction in child labor practices in such countries (as its overall main effect). FDI may nevertheless lead to an increase in child labor practices in certain economical sectors like agricultural sectors (such as banana workers and coffee farmers in Africa) and industrial sectors (such as sweatshop jobs performed in factories where handmade blankets, shoes, footballs, and carpets are fabricated by children as in India and Pakistan), where nimble fingers are supposedly needed (USDOL 2005; ILO 2007). This thesis proceeds in the following order. I first provide a review of the literature on issues related to child labor practices and FDI. I then state the importance of my thesis and elaborate on its main contributions to the literature. Next, I present my theoretical and methodological frameworks that I employed in my thesis. Subsequently, I present my empirical results. The final section offers a conclusion