Question

What is the “race to the bottom” scenario?

Short answer

Pressure of lowing environmental standards to attract MNCs to setup their production units.

Step-by-step solution

Step1. Introduction

With the rising global warming and other environmental concerns, many countries pledge and impose environmental standards and rules to abide by while engaging in the process of production.

Step2. Explanation

Race to the bottom is an adverse phenomenon concerning this environmental safety standards.

Countries more often than not, lower down their standards of environmental protection and relax the laws to protect the environment in order to attract MNCs to setup their production units in their economies. This is seen as an incentive so as the MNCs do not have to spend much regarding environmental protection measures. This shall considerably reduce their cost of production and they can hence increase their profits.

Following this pursuit, many countries lower and relax their environmental protection laws to attract production units so as their countries prosper economically.
This quest is referred to as race to the bottom.