Sweatshops and the Apparel Industry

Powell and Skarbek wrote this paper to examine studies that claim that Multinational Enterprises (MNEs) pay more than domestic firms in Third World countries. The paper attempts to find the fine line in the data that separates independent domestic companies and those that are subcontracted by MNEs. Powell and Skarbek examine the highly controversial apparel industry in ten nations and compare it to other jobs in these economies. The paper concludes that there is no question that MNEs, in their so-called sweatshops, pay more than other job options in the economies in which they exist.

Authors

Benjamin Powell is Senior Fellow at The Independent Institute, Director of the Free Market Institute at Texas Tech University, and former President of the Association of Private Enterprise Education. He received his Ph.D. in economics from George Mason University and his Bachelor of Science degree in Finance and Economics from the University of Massachusetts at Lowell.

David Skarbek is a lecturer in Political Economy at King’s College in London. He received his Ph. D from George Mason University and has interest in the research of property right and trade.

Key Terms and Concepts

Academic Consortium of International Trade (ACIT)- Formed by Jagdish Bhagwati, ACIT sought to raise awareness about the downfalls of the anti-sweatshop movement. ACIT, which features a large number of economists, uses economics and finance to support their claims. Their public stance led to the formation of SASL.

Scholars Against Sweatshop Labor (SASL)- Formed in response to ACIT, SASL is misconceived to ignore economics. In fact, the group gathered signatures on their letter in response to ACIT, 73% of which came from economists. These two groups have formed a sort of rift in the arguments about sweatshops among scholars, despite both groups featuring a mixture