Trade, Investment and Labor Flows in Developing Countries
Faculty Coordinator: Mike Moore
email: mom@gwu.edu

U.S. businesses and workers face enormous opportunities and challenges in the coming years as globalization and technological advances continue. This program will provide a nexus for studying trade, investment, and labor market challenges, particularly with regard to developing countries, all of which have direct implications for U.S. business competitiveness.

The examples of national interdependence in terms of trade, investment and labor markets are many. The integration of China and India into the global economy, whose citizenry represent about one-third of the world’s total population, could mean enormous new markets or dynamic new competitors for U.S. enterprises. Institutional realities abroad, including foreign government regulatory decisions (e.g., technical standards or administered protection) can also have profound effects on U.S. firms. Instability in emerging markets not only can suddenly close off potential markets to U.S. exports, but also the resulting increase in perceived risk can affect long term U.S. interest rates and profoundly change long term growth prospects for U.S. companies. The U.S. economy also faces competitiveness problems from mismatched domestic labor demand and domestic labor supply, especially with skilled workers in sectors vital to U.S. well-being such as information technology and health care.

Strong empirical relationships between economic growth and receipt of foreign direct and portfolio investment, trade surpluses and (skilled) labor flows have been demonstrated in the literature for developing countries (measured in terms of increases in Gross Domestic Product (GDP)). However, both the strength of these relationships and the direction of causality between these variables appear to vary from one national economy to another. Variances in governmental protection and economic liberalization in developing countries can account for some of these findings, but other institutional answers including the impact of domestic social policies and the efficacy of global trading and investment regimes must be sorted out to fully capture the scope of development implications stemming from global trade, investment and labor issues. Understanding the role of these institutions in promoting development will allow U.S. firms and policy makers to design effective strategies for promoting our interests on the world stage.

This integrated program on trade, investment and labor is comprised of research, education and outreach activities that include the following fundamental issues:

• dumping, and anti-dumping trends and effects on U.S. business competitiveness
• technical standards harmonization implications for costs in overseas business
• economic integration, economic sanctions and other policy initiatives that promote and/or restrain trade, investment and labor flows around the world
• economic and financial stability in developing countries that are key markets for U.S. exports and industry growth
• labor market stability in sectors crucial to U.S. economic and social interests (e.g. information technology, health care)