Question

What is the “race to the bottom” scenario?

Short answer

A race to the bottom can also occur among regions as well. This term is often used within the context of grabbing market share or in labor market, and refers to efforts by companies to move manufacturing and operations to areas with few worker rights and low labor cost.

Step-by-step solution

Step 1. Meaning of 'race to the bottom'.

It refers to a competitive situation where a country, a company or even a state attempts to undercut the competition's prices by sacrificing quality standards or worker safety, or reducing labor costs.

Step 2. Race to the bottom also occur among regions.

A race to the bottom can also occur among regions also. This term is often used within the context of grabbing market share or in labor market, and refers to efforts by companies to move manufacturing and operations to areas with few worker rights and low labor cost.

Step 3. Some of the examples of 'race to the bottom'. 

a) Globalization has created a fertile market for exchange of ideas and trade between countries, it has also resulted in fierce competition between them to attract trade and investment.

b) A jurisdiction may relax regulations or cut taxes and compromise the public good in an attempt to attract investment, such as the building of a new factory or corporate office.