Globalization and Child Labor: Good Study, Wrong Headline

The study is from Osmangazi University, "The effects of globalization on child labor in developing countries"  I was initially drawn to the July 2010 study by a link at "The Environment Site", titled "Official:  Globalisation causes child labour."

Aside from the opening mis-attribution of the paper to the University of Minnesota (!!), the Environment Site blog headline is disasterously wrong.  The study includes "resource curse" (paradox of plenty) nations and shows that when the income or increased GDP derives from resource exploitation (oil, mining) rather than employment, that child labor rates go up rather than down.

Here's an actual quote from page one of the report:

"In some studies such as Tesfay (2003), Kak (2004), Kambhampati and Ranjan (2005), it is emphasized that child labor participation rates decrease with the progressive stage of economic development. Tesfay (2003) finds significant results about child labor participation rates which initially increase with economic growth but decrease in the following stages in the developing countries that have 1000 USD or more PCGDP. Kak (2004) determines that the level of economic development is the only factor explaining the magnitude of child labor participation rates and there is a non linear relationship between each other. Kambhampati and Ranjan (2005) indicates a balance between the effect of economic growth that increase child labor demand and the effect of economic growth that decrease the child labor supply."

The report does hold out that nations which have GDP under $1000 per year react initially to brand new foreign direct investment (FDI) by increasing child labor.  Perhaps that's the point on the graph which blogger Chris Milton is thinking supports the claim that Globalization increases child labor.  But the report clearly shows that this is a reaction by economically backward nations when the door is first open, and that in 3B3K nations - the ones where the E-Waste imports go - that child labor shows strong decline.


I have always said that the nations which earn below $1000 per year tend not to have electricity, tend not to have a dynamic refurbishing center, and that even "working" used electronics are not likely to be reused there.   However those are not the markets for E-waste!   Haiti is much poorer and much closer than Indonesia, but Haiti is not importing significant containerloads of sorted computer monitors, nor is Haiti paying 3 times the rate for those monitors and PCs than the raw material costs can explain.

Contract manufacturing, assembly, and other high tech employment decreases child labor.   The anti-globalization slant of the "environmental" blog fails to distinguish between reuse, refurbishing and recycling economies, or indeed contracted assembly, from mining and oil.  It ignores the positives of fair trade.

While there are tensions (oft cited in my blog) between gray market white box (re)manufacturing and contract manufacturing and assembly (when the employment is at the behest of a multi-national corporation), neither type of employment increases child labor rates.

I am headed to a conference in Washington DC today, where EPA and University researchers are trying to get a handle on data surrounding "e-waste exports".   It's a refreshing change from people taking a study and putting politically correct headlines above it, accompanied by a sad photo.

There are probably a lot of cases where a carpet-bagging capitalist, drawn to nothing but the low wages in a nation, will set up shop and exploit child labor where child labor is there to exploit.   I am not defending the worst practices of economic development.  But when the imports are demand-based, based on rising demand for internet access, places like Cairo and Jakarta and Lima, the place gets better.  More schools, more hospitals, more nourishment.   I hate it when people pose as do-gooders and take the ladders away from my friends, I hate it when people accuse internet cafe entrepreneurs of being child labor polluters.  You guys are portraying smart people who have gone to school as "primitives", and  you are gonna be second against the wall come the revolution.