diff --git a/test/helpers/setup.js b/test/helpers/setup.js
index <HASH>..<HASH> 100644
--- a/test/helpers/setup.js
+++ b/test/helpers/setup.js
@@ -46,7 +46,7 @@ function createWebpackConfig(testAppDir, outputDirName = '', command, argv = {})
     argv.context = testAppDir;
     const runtimeConfig = parseRuntime(
         argv,
-        __dirname
+        testAppDir
     );
 
     const config = new WebpackConfig(runtimeConfig);
Fixing very old bug in tests, where the "cwd" passed to parseRuntime()
was wrong

This was discovered because the .babelrc file was not being seen,
because the cwd was incorrect