LOW WAGE SOCIAL DUMPING
Prepared in the partial fulfillment for the requirement of course IMS 6204 – 556 GLOBAL BUSINESS
Dr. Habte Woldu
September 14, 2010
What is Dumping?
Dumping is generally used in the context of international trade law, where dumping is defined as the act of a manufacturer in one country exporting a product to another country at a price which is either below the price it charges in its home market or is below its costs of production. What is Social Dumping?
“Social dumping” is defined as a term (with a negative connotation) that is used to describe a temporary or transitory movement of labor, whereby employers use workers from one country or area in another country or area where the cost of labor is usually more expensive, thus saving money and potentially increasing profit. Social Dumping refers to an unfair advantage in international trade. It results from differences in direct and indirect labor costs, which constitute a significant competitive advantage for enterprises in one country, with possible negative consequences for social and labor standards in other countries.  TYPES OF SOCIAL DUMPING
a.Social dumping is the process whereby a transnational organization shifts production from a country with relatively high-employment costs to a country with lower costs. b.Examples of Social Dumping are Production of Shoes by Nike in the third world countries. 2.Product Dumping
a.The act of a Manufacturer/firm in one country exporting a product to another country at a price which is either below the price it charges in its home markets or below its costs of production. b.Exporting Products that are considered illegal in one country to another country where it’s not illegal. c.Examples for Product Dumping are Japanese Automobiles sold in United States, Baby Pacifiers exported by United States that cause choking problems. 3.Environmental Dumping
a.Environmental dumping is the practice of Trans frontier shipment of waste (household waste, industrial/nuclear waste, etc.) from one country to another. b.Examples Ship Dismantling in India.
a.Cultural Dumping is the unfair competition caused by cultural barriers aiding local firms. b.Examples: Long working hours by Indian IT professionals working in United States. 5.Financial services dumping
a.Fianancial Services dumping is the unfair competition because of country’s low capital/asset ratio. b.Exports due to low exchange rates.
CAUSES FOR SOCIAL DUMPING
Technology – Technological innovations, particularly in the field of information and communication, have played and still do play a central role without doubt. The Internet represents a symbol for globalization in many respects. Transport – The enormous increase in trade as a further central element of commercial globalization results the fact that transport costs have sunk rapidly, and goods can be transported more quickly. End of the Cold War – The end of the Cold War is also frequently named as a cause. Whereas the world was divided up into two camps during the East-West conflict, this separating influence crumbled in the years following 1989/90 following the fall of the Iron Curtain. The former "Eastern Bloc countries" have opened their borders to the world market.  Global Problems – Global problems have played a central role, above all at a conscious level. The presence of “one world stores” in the highly developed industrial nations is not the only evidence of this. Liberalization – Globalization critics in particular, such as the ATTAC network, continually point out that we are not dealing with an inevitable process, but that globalization, in essence, is more the result of deregulation policies under the leadership of the USA since the Second World War. Without...