Question

Explain the logic behind the “race to the bottom” argument and the likely reason it has not occurred.

Short answer

It is costly to relocate to far away low income countries.

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 a practice under which countries, specifically low-income countries engage in relaxation of environmental laws and regulations to attract and incentivize big MNCs to setup their production units in their countries. This is so as it would generate employment and bring about economic boost and development.

But this has not been successful as although to abide by the environmental regulations, businesses incur cost, but other factors availability of adequate resources, labor, infrastructure, etc also are decisive for relocation purpose.