How International Exchange, Technology, and Institutions Affect Workers: An Introduction

In a world of deepening trade links, rapid technological change, and weakening institutions, workers in rich and poor countries alike are concerned about their incomes and the security of their work. In contrast to the substantial quantity of analysis on industrial countries, relatively little careful work has been done on these issues in developing countries, especially in the context of the recent globalization of economic relations. Empirical work suggests that disequalizing trends in some developing countries may have been caused by the entry of low-income countries such as China into world production or by the greater quality and technological requirements of contemporary trade in goods. Whatever the source, these results raise questions about the viability of institutional mechanisms for supporting the income security and working conditions of workers. Many labor market regulations are already ineffective owing to weak enforcement capabilities. However, in most developing countries, there will be a rising fraction of workers in formal labor contracts, rising demands for formal mechanisms for dealing with income insecurity, and a potentially larger role for unions in an important segment of the work force. Thus, it is of increasing importance to set the policy and institutional framework in a fashion that is both consistent with competitive pressures and supportive of workers' participation and security.