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Brexit Impact on Globalization
In June of 2016 the United Kingdom voted to succeed from the European Union. The decision is sure to send shockwaves through the global economy. With the UK deciding to leave the EU other countries have begun to question if globalization is really something that will benefit them in the future. Merriam-Webster’s dictionary defines globalization as the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and tapping of cheaper foreign labor markets. Just how bad the Brexit will affect the global economy still remains to be seen.
Some people believe that the UK leaving the EU is the first sign of globalization losing steam. Mehmet Simseck, the Deputy Prime Minister of Turkey said, “the Brexit is a key pullback to more trade openness, labor movements, and globalization in general.” Politicians and the general public who support leaving specifically point to the EU’s immigration rules (Elliot). With porous borders the influx of refugees increased creating loss of job opportunities and lower wages. As well as lower wages and loss of jobs, proponents against globalization argue that it just widens the gap between the rich and the poor (Elliot). Due to the fact that the rich just grow their businesses globally and the poor, less-skilled workers’ wages get cut due to cheap foreign labor. As economies become increasingly worse and worse the anti-globalization parties continue to gain support. Similar situations are occurring across the world as many blue-collar republicans are supporting Donald Trump’s agenda of limiting influx of refugees, job losses, and loss of competition through free trade (Elliot). To be fair, not all of these problems occur directly as a result from the European Union. And they will still be there when the UK is officially succeeded from the Union as well.
Contrary to some thinking globalization is losing steam there are others out there that believe nothing will stop globalization at this point. The Asia-Pacific managing director and vice-chairman of JPMorgan Chase said, “the path to globalization will continue, Brexit won’t impact cross national movement” (Chandran). Despite the UK leaving the EU North America will still want to maintain their strong beneficial relationship with the EU (Cumming). This reason along with the fact that developing nations still continue to play catch up are strong arguments as to why globalization will not just fade away. Countries like Japan, China, and South Korea reaped the benefits and rewards when finance and factories flowed from the richest countries to the poorest (Schuman). The countries who missed out, most of the Middle East and Africa are trying to play catch up now (Schuman). These countries sitting on the sidelines for the first “round” of globalization has caused a whole untapped market to emerge. “The World Trade Organization figures that 52 percent of developing countries’ exports went to other emerging economies in 2014, up from 38 percent in 1995” (Schuman). Places like India and Africa are beginning to reap the rewards of opening up their borders to foreign corporations allowing them to begin an unprecedented journey out of poverty. “India’s total trade with Africa grew more than 60 percent in only four years, to almost $48 billion in the country’s 2014-15 fiscal year” (Schuman). These numbers are staggering and they will only continue to grow as these countries’ economies’ are only growing bigger. All these numbers trying to climb back up from where they were before the 2008 recession.
Of course the future landscape of globalization will sure be slated to change with the upcoming election. “The global market economy was created by a set of political decisions in the past and it can be shaped by political decisions taken in the future” (Elliot). For example, if Trump’s ideas of protectionism and Americanism ever get placed into effect, could have extreme retaliatory measures (Schuman). A situation like that would be detrimental to global economic growth. The idea of “building a wall” to close out borders may not be the best solution out there but it has still managed to gain supporters. With some countries being pushed out due to certain ideologies it will be sure to have a negative impact on globalization. At the same time, the argument could be made that instead of just isolationist ideas, politicians should address these concerns from globalization directly (Schuman). Things like less-skilled workers, which stems directly from expensive higher education and trade schools. In the coming years new legislation is going to have to have a tremendous impact on globalization.
With a monumental decision in June of 2016 the United Kingdom has single-handedly raised endless questions on the future of globalization. Whether globalization is losing steam or continuing to push on, we will find out sooner rather than later. The future will be drastically affected by the election in the United States. Depending on which candidate is elected could ultimately decide globalization’s fate. However, at the same time some experts believe globalization has gotten to big to be denied now and nothing will slow it down. Regardless, at some point, politicians are going to have to find the happy medium with globalization.
- Chandran, Nyshka. "Is Brexit a Vote against Globalization?" CNBC. CNBC, 2016. Web. 13 Oct. 2016.
- Cumming, Douglas J. and Zahra, Shaker A., International Business and Entrepreneurship Implications of Brexit. British Journal of Management, Forthcoming. 17 July 2016. Web. 13 Oct. 2016.
- Elliott, Larry. "Brexit Is a Rejection of Globalization." The Guardian. Guardian News and Media, 26 June 2016. Web. 13 Oct. 2016.
- "Globalization." Merriam-Webster.com. Merriam-Webster, n.d. Web. 31 Oct. 2016.
- Schuman, Michael. “Brexit Won’t Stop Globalization.” Bloomberg.com. Bloomberg, 14 July 2016. Web. 01 Nov. 2016.