There is a seemingly instinctual, hair-trigger reaction from a lot of voters and policy makers alike, to support this concept of protectionism. Limiting exports, import tariffs, and other such policies in response to growing international competition, foreign exports, and as a weapon with which to combat child labour and corruption in third world nations.
This is indeed prevalent in nations suffering poverty and, more to the point, ones with a high rate of child labour.
My goal is to disprove the common misconception that child labour is fought through protectionism, like for example, the ‘Harkin Bill’ which caused trouble in Bangladesh. Which I will get to further on.
Before beginning my arguments I would like to acknowledge two things. Firstly, that I am assuming Child Labour is a bad thing that must be reduced (because I know not everyone here probably thinks that) and secondly, that free trade isn’t perfect, nor is globalisation. They don’t fix everything, and reduction of the importance of borders can sometimes also mean bad things, e.g. growth of sex tourism and other such things. However, this argument will be focussed on Child Labour specifically.
There will be three parts where I briefly examine an argument and base it off of a study. They will be (in order)
-Liberalisation encourages Growth, Growth reduces Child Labour
-Sanctions from First World Nations don’t work.
-Poor Credit Accessibility means Poor Education Opportunity
Lastly, I want to acknowledge ‘In Defence of Globalization’ by Jagdish Bhagwati to be the most persuasive and useful piece of literature to which I formed my position on the matter. Also, the original source from where I was able to find the studies I quoted.
Let’s begin.
[size=18][u][i][b]Liberalisation encourages Growth, Growth reduces Child Labour[/b][/i][/u][/size]
I am going to start by quoting an abstract from a study done at Dartmouth by Eric Edmonds and Nina Pavcnik on the relationship between child labour and market liberalisation. Most important parts are bolded.
[quote]This paper considers the impact of liberalized trade policy on child labor in a developing country. While trade liberalization entails an increase in the relative price of the exported product, trade theory provides ambiguous predictions on how this price change affects the incidence of child labor. In this paper, we exploit regional and intertemporal variation in the real price of rice to examine the relationship between price movements of a primary export and the economic activities of children. [b]Using a panel of Vietnamese households, we find that reductions in child labor are increasing with rice prices.[/b] Declines in child labor are largest for girls of secondary school age, and we find a corresponding increase in school attendance for this group. Overall, rice price increases can account for almost half of the decline in child labor that occurs in Vietnam in the 1990s. [b]Greater market integration, at least in this case, appears to be associated with less child labor. Our results suggest that the use of trade sanctions on exports from developing countries to eradicate child labor is unlikely to yield the desired outcome.[/b][/quote]
[url=http://sccie.ucsc.edu/conference/2002/Pavcnik_Paper.pdf]Entire Source Here[/url]
The basic idea is that poor agricultural workers, particularly farmers, who do not profit well off their rice produce must supplement their income by having their children work. When demand for rice goes up (thanks to exports, for the duration of this study Vietnam doubled its Rice export to 3 million tonnes) and the workers profit further from their sales, they no longer need their children to supplement their income. To further quote the study;
[quote]An increase in the relative price of rice (potentially stemming from liberalized trade policy) enhances rural household income. [b]Households appear to substitute the extra income captured by household landholdings for income previously earned by children.[/b] This extra income appears to particularly benefit older girls who experience the largest declines in child labor and the largest increases in school enrollment. [b]Hence, child labor declines even though globalization also raised the potential earnings of children. In this way, our evidence suggests that greater integration of unskilled labor abundant developing economies into world markets can be associated with less child labor.[/b][/quote]
So we can see that child labour demonstrably goes down in correlation to liberalisation of agriculture markets as families no longer need their children to work to help the family survive.
[size=18][u][i][b]Sanctions from First World Nations don’t work.[/b][/i][/u][/size]
Some argue that placing sanctions on countries that utilise child labour is a humane method of trade that forces third world nations and any countries allowing child labour to change for the better. The perfect example of this is when Democrats Senator Tom Harkin proposed a bill in 1993, known as ‘U.S. Child Labor Deterrence Act’ (or the ‘Harkin Bill’) which would prevent the USA from importing products which utilised Child Labour at any stage of production.
In Bangladesh, which has a large Child Labour workforce (12%, see source below) and whose garments were threatened by this bill, the results were very different to the intentions of Harkin and his supporters.
A study by Mohammad Mafizur Rahman, Rasheda Khanam and Nur Uddin Absar published in the December 1999 issue of the Journal of Economic Issues reviewed the reactions of Bangladeshi families.
Quoted below;
[quote]Unfortunately, the supporters of the bill mistakenly presume that if children are not allowed to work, they will attend school. Considering the socioeconomic realities of developing countries, this is far from the truth. For most of these children, school is not a choice, and work itself may be needed to sustain life. In Bangladesh, studies conducted by local NGOs and UNICEF[b], following the initial publicity of the bill have shown that children displaced from garment factories in January 1993 did not rush to school. Most of them found alternative, less secure, and less lucrative employment in the informal sector.[/b] Common occupations for children in this sector include working as ticket collectors or tempos and/or as lunch boys ferrying heavy tiffin carriers from office to office. Girls have found work as domestic servants or flower sellers [Sobhan 1994, 6]. [/quote]
[url=http://findarticles.com/p/articles/mi_qa5437/is_4_33/ai_n28747994/]Source available here.[/url]
According to economist Jagdish Bhagwati (‘In Defence of Globilization’, P71) this included prostitution work for the girls. The amount of children displaced from formal work could have been as high as 50,000.
[size=18][u][i][b]Poor Credit Accessibility means Poor Education Opportunity[/u][/i][/b][/size]
As discussed in the Bangladesh and Vietnam examples, it was demonstrated that poor families supplement income needs with having their children work. It is interesting to note that poor families in first world nations do not make the same decisions. Not least of all because of the laws involved, but also because of the developed financial systems, or more specifically, access to credit.
This time I will quote a study by Rajeev H. Dehejia and Roberta Gatti based on the relationship between Child Labour and access to credit.
[quote]Our results show a strong link between child labor and access to credit even when these factors are accounted for and a range of estimation techniques is used. This relationship appears to be particularly sizeable in the sample of poor countries, which have both less developed financial markets and greater child labor and, as such, are in general of greater policy interest. Moreover, [b]we find that income variability has a sizeable impact on child labor in countries where financial markets are underdeveloped, suggesting that households resort to their children’s work to cope with income shocks[/b]. This is not the case though when financial markets are developed, which suggests that [b]access to credit might effectively cut households’ demands on children’s time.[/b][/quote]
[url=http://www.columbia.edu/cu/economics/discpapr/DP0102-69.pdf]Full Source Here.[/url]
The study, which is an interesting read, establishes that with an access to credit poorer families are more likely to keep their children out of work and in school. Which is a better long term strategy as the child increases their education, and subsequently their ability to earn capital.
Lack of access to credit institutions is something that can be fought through globalisation, as foreign banks are able to make loans. Not only this, programs like Microfinance and make credit more available and thus increase the flexibility that poorer third world households have.
[size=18][u][i][b]In Conclusion.[/u][/i][/b][/size]
Child Labour is a product it would seem, of poverty. As it is prevalent namely in countries suffering poverty and stuck in the third world. It is not a formal or cultural issue that can be solved by sanctions by first world nations as demonstrated by the implications and real reactions of the Harkin Bill in Bangladesh.
Furthermore, it is apparent that third world families do not want their children to work, but feel it necessary, as Child Labour goes down when their labour (such as Rice agriculture) becomes more valuable, or when they have access to credit (and more advanced, more accessible financial institutions).
So, what do you think of my arguments? What do you think is a good, comprehensive policy for First World countries in order to commit to reducing Child Labour?