Race to the bottom
It’s a socio-economic phrase to describe either government deregulation of the business environment or reduction in corporate tax rates, in order to attract or retain economic activity in their jurisdictions. While this phenomenon can happen between countries as a result of globalization and free trade, it also can occur within individual countries between their sub-jurisdictions. It may occur when competition increases between geographic areas over a particular sector of trade and production. The effect and intent of these actions is to lower labor rates, cost of business, or other factors (such as pensions and other externalities) over which governments can exert control.
A race to the bottom can occur when countries or regions loosen environmental regulations or enforcement of standards in order to attract more businesses and tax revenue. Producers operating in places with more strict regulations would be incentivized to move to those more lax jurisdictions, where they could pollute more freely. Competition between nations, especially in the developing world, can lead to a series of deregulation that leaves the environment unprotected.
This deregulation lowers the cost of production for businesses. Countries or localities with higher labor, environmental standards, or taxes can lose business to countries or localities with less regulation, which in turn makes them want to lower regulations in order to keep firms' production in their jurisdiction, hence driving the race to the lowest regulatory standards.
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Fishman, C. (2013). Walmart Creates A Race To The Bottom Throughout The Economy. Popular Resistance.