Trade and investment effects of forced labour : an empirical assessment

This paper explores the international economic effects of forced labour, namely the linkages of forced labour with comparative advantage (trade) and foreign direct investment flows. It discusses several forms and the prevalence of forced labour and presents the results of empirical tests of those linkages. The results show that forced labour may enhance the endowment of unskilled labour. It can thus be expected to improve comparative advantage in unskilled-labour-intensive goods, that is, commodities where the impact of forced labour is likely to be felt most strongly. In contrast, foreign direct investment is negatively linked with forced labour. This result even holds for relatively poor developing countries.