The dynamic refers to a situation in which states compete to attract business by lowering taxes and regulations). It is viewed as a drawback of federalism.

race-to-the-bottom

Explanation: The race-to-the-bottom dynamic is a term used to describe a socio-economic policy aimed at retaining, improving and attracting economic activities and growth by employing tactics such as tax reduction on goods and businesses, deregulation of the business environment, applying subsidy on products and other related policies aimed at attracting investors. Race-to-the-bottom the bottom approach is often employed by competing nations or states whereby strict economic policies are often sacrificed in place of policies which would enable the states have a competitive edge over it's competitors.