Footballs in Pakistan: An Innovation Story

By 28 April 2016 No Comments

via Harvard Business Review: Last May, President Obama chose Nike headquarters in Oregon for a major speech on the Trans-Pacific Partnership trade deal — emphasizing its “strong, enforceable provisions” on labor standards — and was roundly criticized.

On one hand, many noted that in the 1990s, following scandals in Indonesia and Vietnam, the shoe giant’s name had become, in the words of the company’s co-founder and former CEO Phil Knight, “synonymous with slave wages, forced overtime, and arbitrary abuse.” On the other, critics argued that labor standards in trade agreements are a form of protectionism in disguise, favoring U.S. workers over those in poorer countries.

But in a recent study, my colleagues and I stumbled across evidence that both the choice of venue and the message were surprisingly apt. Nike is a leading example of how both anti-sweatshop campaigns and labor standards in trade agreements can be good for innovation and growth in developing countries.

This is not a common view among trade economists or policy-makers. But the news from Sialkot, Pakistan shows that the argument makes a lot of economic sense.

Nike employs approximately 335,000 people in 73 factories across Vietnam.