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Business

 December 19, 2000
Globalization Is A Race To The Top, Not To The Bottom

 In a letter in today's Financial Times, ICC (International Chamber of Commerce) Secretary General Maria Livanos Cattaui exposes the myth that globalization is a 'race to the bottom' and points out that countries with high labour standards attract most foreign investment.

Mrs Cattaui reacted to a letter published in the same newspaper from Bill Jordan, General Secretary of the International Confederation of Free Trade Unions, who asserted that multinational companies travel the world "in search of the most abusive, hence lowest-cost workplace practices".

Quoting figures in the UN World Investment Report 2000, the ICC Secretary General asked how Mr Jordan could reconcile his contention about a race to the bottom with the fact that almost 75% of global outflows of foreign direct investment last year went to high-wage developed countries, where labour and environmental standards are the highest.

If Mr Jordan was right, was it not odd that those same multinationals were actually investing so heavily in the 'high cost' industrial world? "The truth is that abusive practices are not a source of international competitive advantage," Mrs Cattaui wrote.

"What the global FDI figures indicate is rather a 'race to the top' in which countries with high standards and not abusive practices attract the lion's share of wealth -generating foreign investment by business. The International Chamber of Commerce is concerned that the developing countries as a whole currently succeed in attracting no more than a quarter."

For these reasons, ICC is working hard, including in cooperation with the United Nations, to help create conditions within developing countries that are truly effective in bringing in investment from abroad.

"We support the race to the top and the efforts of countries across the globe to join in," the ICC Secretary General asserted.