How Brexit impacts globalization

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Key principles of globalisation, including trade and immigration, were among the catalysts that pushed the UK out of the EU last week, leading many pundits to question whether the policy is still welcome in the world today.

This debate took center stage at a World Economic Forum (WEF) panel in Tianjin on Tuesday.

“This [Brexit] is a major obstacle to greater trade openness, labor movements and globalization in general. So, in a way, globalization is running out of steam,” observed Mehmet Simsek, Deputy Prime Minister of Turkey.

Politicians backing Britain’s Leave camp have pointed to EU immigration rules, particularly the influx of refugees, dwindling job prospects and stagnating wages – factors widely seen as the result of porosity borders – as reasons to leave the economic bloc. Thursday’s vote was a clear reminder that the bulk of the British public was unhappy with these policies, which WEF experts say has effectively translated into discontent with globalisation.

“There is certainly a backlash against globalisation… There are winners and losers, we saw it in the UK vote: the gap between rich and poor, young and old , the skilled and the less skilled, the urban and the rural… We need to recognize these gaps are becoming increasingly serious,” said Nouriel Roubini, president of Roubini Global Economics and professor at New York University.

Anti-globalization parties are increasingly gaining mass support in peripheral and central eurozone countries as the region’s unemployment remains in double digits, Roubini continued.

In Austria, for example, the far-right Austrian Freedom Party, which also takes a hard line on immigration, was just one percentage point away from winning the presidency in May.

A similar story can be seen across the Atlantic, where Republican candidate Donald Trump has won the support of several blue-collar, mostly white American workers who complain about job losses, the influx of foreigners and the loss of competitiveness of free trade.

Offering a more optimistic view, Jing Ulrich, Asia-Pacific managing director and vice chairman of JPMorgan Chase, did not believe that international integration was under threat.

“The path to globalization will continue, Brexit will not impact transnational movements.”

Zhu Min, deputy managing director of the International Monetary Fund (IMF), expressed a bit more concern about the implications of Thursday’s referendum.

“We need to remind the parties involved [in Brexit] to support globalization. If the trade talks between the UK and the EU reverse, that would be terrible.”

While anti-globalization sentiment is likely to persist, countries have no choice but to adapt, suggested Huang Yiping, a professor at Peking University.

China, for example, has been the main beneficiary of globalization for decades, but now the continent needs to reconsider how to reconfigure its engine of growth and focus on domestic demand rather than external demand, he said. note.

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