We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Race to the Bottom?

By Brendan McGuigan
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A race to the bottom is a socio-economic concept that occurs between nations. When competition becomes fierce between nations over a particular area of trade and production, the nations are given increased incentive to dismantle currently existing regulatory standards. Such a race may also occur within a nation (such as between states or counties), but this occurs much less frequently because the federal government has recourse to enact legislation slowing or halting the race before its effects become too pervasive.

The term is often used pejoratively, to describe the elimination of what is seen as beneficial legislation: environmental safeguards or workers' rights, for example. It should be noted, however, that in many instances a race to the bottom proves to be a force for good by eliminating pointless bureaucracy or graft.

In the modern age, a sharp increase in races to the bottom has been seen as a direct result of the World Trade Organization and its policies. By actively eliminating what are seen as barriers to trade (often including labor and environmental laws), the WTO begins a push towards "freer" trade, which escalates quickly into the dismantling of standards so that countries can better compete.

It may be seen that with the global push towards free trade in the 1990s, labor is now very susceptible to the race to the bottom model. With an extremely large labor pool to draw from worldwide and a virtually unrestricted ability to move capital, multi-national corporations may now freely move their operations from country to country, following the most affordable labor. This in turn affects labor laws, particularly in developing countries, where things such a minimum wage or required overtime pay create a large barrier to lowest-cost labor. The race, therefore, dictates that more and more nations (again, particularly in the developing world) will eliminate their labor laws.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
By Certlerant — On Feb 17, 2014

I understand the frustration with that sort of situation, Glasis, and I sympathize.

But, I also know that the city of Pittsburgh is cleaner than it ever was in the steel producing times, and residents are proud of its renaissance.

By Glasis — On Feb 17, 2014

Certlerant, you might change your opinion if you lived in the Pittsburgh area in the 1980s.

Up until that point, steel mills were the lifeblood of western Pennsylvania.

Then, the EPA came in and not only imposed new laws on environmental filtering systems for the mills, but required the companies to complete multimillion dollar changes in a very short time frame.

As a result, most of the mills were forced to move to other countries or other parts of the United States where, for some reason, the rules were less restrictive.

It has taken the area about 30 years to reinvent itself, and some mill communities will never be the same.

By Certlerant — On Feb 16, 2014

A race to the bottom that eliminates environmental codes may benefit the countries or municipalities trying to compete in trade, but could have a disastrous effect on the world as a whole.

Environmental laws and codes are usually not popular in the business world and can be painful to the company's bottom line, but they still help to make the air we breathe and water we drink cleaner and safer.

Many people like to think that the Environmental Protection Agency and other agencies impose restrictions in some attempt to hurt business in a specific area, but that is simply not true.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.