Impacts of Trade and FDI on Productivity, Management, and Work Place Condition: Evidence from Myanmar

Does trade and FDI liberalization promote sustainable economic growth in developing countries? Does this come at the expense of the safety of local workers? This project assesses these significant economic questions. 

Does trade and FDI liberalization promote sustainable economic growth in developing countries? Does this come at the expense of the safety of local workers? as many NGO activists claimed after the tragic factory accidents in Bangladesh and Pakistan? To date the evidence on these questions has been limited by the lack of causal evidence. While trade and multinational presence are strongly correlated with higher growth, productivity, wages and improved working conditions, the causal link is much less unclear. This project will exploit the rapid opening of Myanmar to trade and FDI as a natural experiment to address these questions. This provides an ideal setting to examine the impact of a rapid trade liberalization by comparing a heavily impacted industry (textile/garments) to a relatively untouched industry (food).

The author will compare the evolution of productivity, management and working conditions in around 250 textile/garment plants (a sector heavily impacted by trade and FDI) to a similar number of food plants (a sector relatively untouched because of quality and local taste issues).

This project will direct implications on trade liberalization for developing countries (e.g. Generalised Scheme of Preferences), deregulation on FDI entry allowing multinationals to use domestic resource and to sell in domestic market, and the impacts of the latter on social compliance on workpalce.