Trade and investment effects of forced labour: An empirical assessment

This article explores the international economic effects of forced labour. Specifically, it presents the results of empirical tests of the linkages between eight forms of forced labour and both comparative advantage and foreign direct investment flows. Although the regression results are sensitive to the exact specification of the estimated equation, they show that forced labour is positively associated with a comparative advantage in unskilled-labour-intensive goods, i.e. those goods whose production is most likely to involve forced labour. In contrast, foreign direct investment displays a strong negative association with forced labour. This result also holds for relatively poor developing countries.