THE IMPACT OF IMPORT DEPENDENCY ON THE LABOR MARKET (A POLITICAL ECONOMY PERSPECTIVE)

Abstract

The increasing integration of national economies into the global trade system, particularly in developing countries, has intensified debates about the effects of import dependency on domestic labor markets. This article examines these effects through a political economy lens, arguing that such dependency can lead to a decline in domestic production capacity, a rise in informal employment, and the erosion of institutional frameworks governing labor relations.

The study systematically compares theoretical approaches from diverse schools of economic thought—liberal, structuralist, and neo-mercantilist—to understand varying interpretations of import dependency's consequences. It then analyzes the United States' recent protectionist policies as a contemporary case example of a developed nation responding to perceived vulnerabilities. A comparative empirical assessment of labor markets in Latin America (e.g., Mexico), Bangladesh, the United States, and Germany provides broad international context, highlighting common challenges and divergent outcomes. Crucially, the paper offers an in-depth examination of Azerbaijan's labor market, exploring how import dependency in key sectors intersects with its ongoing economic diversification efforts, regional inequalities, and the prevalence of informal labor. The analysis also considers income volatility linked to the energy sector and its implications for social protection.

The findings reveal that import dependency has profound economic, social, and political implications, extending beyond mere trade balances to fundamentally reshape labor market structures. Addressing the disruptions necessitates a multi-faceted approach that goes beyond traditional tariff-based interventions, requiring robust institutional reinforcement, comprehensive regulation of labor relations, strategic industrial policy, and fostering regional cooperation. The political economy framework offers a robust lens for understanding these complex, multi-dimensional dynamics and formulating viable policy alternatives.