Race to the bottom – Wikipedia

Race to the bottom is 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 usually foreign 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 (states, localities, cities). It may occur when competition increases between geographic areas over a particular sector of trade and production.[1] The effect and intent of these actions is to lower labor rates, cost of business, or other factors (pensions, environmental protection and other externalities) over which governments can exert control.This deregulation lowers the cost of production for businesses. Countries/localities with higher labor, environmental standards, or taxes can lose business to countries/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.[2]

Origen: Race to the bottom – Wikipedia

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