Are Foreign-Owned Businesses in Vietnam Really Sweatshops?

Abstract

Globalization is leading to increased economic interactions between the U.S. and almost every other country in the world. A growing percentage of the American economy is devoted to foreign trade, and many U.S. businesses are establishing offices, factories, and other economic ventures in other countries. Most economists claim that globalization is, on the whole, a beneficial phenomenon—and one that should be encouraged—because globalization promotes efficiency in the world economy. In addition, some economists claim there are distributional benefits to globalization: for example, when U.S. companies (and companies from other high-income countries) open factories in countries with low wage rates, they create new jobs for poor people. In contrast, other economists argue that globalization has substantial negative effects on the employment and wages of workers in developed countries, and on working conditions and the environment in developing ones. The purpose of this article is to provide some detailed data about the real impact of globalization on workers in low-income countries. In particular, I examine the status of workers in Vietnam, a country that has significantly increased its participation in the global economy during the past decade. I will pay special attention to the condition of workers employed by businesses that have foreign owners or are in joint ventures with foreign investors.

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