Firms vs. Workers? The Politics of Openness in an Era of Global Production

• In Event: Analyzing the Anti-Globalization Backlash: the Role of FDI

Abstract

As the examples of Brexit and the election of Donald Trump remind us, openness to the international economy is a choice. Democratic governments in open economies must confront a long-standing dilemma. On the one hand, when citizens hurt by globalization demand protection, governments must respond. On the other hand, governments have to guard the benefits of globalization from protectionist rhetoric and policies. Yet the increasing ability of firms to split up the production across countries has altered the nature of this dilemma. Fundamentally, in a world of fragmented production and automation, workers’ welfare is delinked from the firms and industries in which they are employed. As such, policies that benefit firms may not benefit workers in those firms. How do different governments address this potential trade-off between democratic accountability and economic efficiency and balance the interests of workers and firms in the new global economy? To answer this question, I (1) examine how global production shapes interests and influence of workers relative to firms, and the consequences for the politics of openness and (2) consider empirical strategies for evaluating the influence of workers versus firms.

Author

• Erica Owen, University of Pittsburgh