The shift of consumer, environmental and other regulations in the direction of political jurisdictions with stricter regulatory standards.
(Vogel 1995, 259)
One of the principal debates around globalization is the question of whether the obligation that nation states are obliged to create economic environments that attract foreign investment and are conducive to free trade requires for this to occur at the expense of protective regulation. Some have argued that stringent regulatory standards increase the costs of compliance for capital, necessitating that states weaken regulations to ensure competitiveness and resulting in what has been described as a regulatory ‘race to the bottom’. While the context clearly differs between affluent, post-industrial western nations and their developing nation brethren, scholar David Vogel argues that this trend has not been borne out.
While there are significant tensions between state regulation and trade or financial liberalization, “on balance, both global and regional economic integration has increased while consumer and environmental standards have become stronger (his emphasis).” While there have been cases where the competition among jurisdictions has prompted governments to produce less stringent health, safety and environmental regulations, the evidence generally shows a shift towards more stringent protective regulations. Vogel describes this trend as the ‘California Effect’.
Following the 1970 Clean Air Act respecting auto emission standards, the state chose to enact stricter regulations than the national standards or those of any other state. Two decades later, Congress shifted the national standards up to California’s level, after which California raised theirs yet again. Consequently, rather than states simply conforming to the lowest possible standards, California has created the impetus for the continual strengthening of national standards. Certainly, Vogel concedes that California’s political clout and market size presumably are major factors in the state’s capacity to influence other jurisdictions. (Vogel 1995, 249, 259, 268)
Vogel, David. 1995. Trading Up: Consumer and Environmental Regulation in a Global Economy. Cambridge, MA: Harvard University Press.