Race to the bottom

Race to the bottom is a socio-economic concept describing a scenario in which individuals, companies, or governments compete by incrementally lowering standards or regulations to reduce costs in order to attract economic activity. This can include labor laws and enforcement, tax rates, and environmental regulations. The race to the bottom phenomenon is in contrast with traditional competition, which tends to improve goods and services.

The term "race to the bottom" can be traced back to the early 1900s, when United States Supreme Court Justice Louis Brandeis used the term in a court ruling. The metaphor would later be used by William Cary in an article in the Yale Law Journal, "Federalism and Corporate Law: Reflections Upon Delaware".

The race to the bottom hypothesis is the idea that countries compete by progressively lowering their regulatory standards to attract trade and investment. Whether the race to the bottom persists in global markets today is debated among academic circles, with empirical evidence supporting both sides. Additionally, the expansion of free trade in textiles in the early 21st century serves as a critical case study for the race to the bottom hypothesis in the global value chain. The implication of a race to the bottom on environmental policy is also strong, applying to both policy within the United States and around the world.