The phenomenon of globalization began in a primitive form when humans first settled into

different areas of the world; however, it has shown a rather steady and rapid progress in

recent times and has become an international dynamic which, due to technological

advancements, has increased in speed and scale, so that countries in all five continents have

been affected and engaged. Nowadays, globalisation has impacted nearly every aspect of

modern life and therefore It is no surprise that it can also have many economic effects on a

country. Most people are probably not aware of how much globalization occurs around them.

For example, it was reported that in 2010, approximately 36% of all clothes and shoes sold in

the US were manufactured in China compared to just 3.4% manufactured domestically. In

this section of the essay we will look past the everyday implications of globalization and

towards the economic implications.

Most economists agree that globalization provides a net benefit to individual economies

around the world, by making markets more efficient, increasing competition, limiting

military conflicts, and spreading wealth more equally around the world. The impact on

Foreign direct investment (FDI) is considered an economic benefit of globalization. FDI

usually increases at a much greater rate than the growth in world trade, helping boost

technology transfer, the growth of global companies and also industrial restructuring. This

also impacts technological innovation as increased competition from globalization helps with

the stimulation of new tech development (especially with increased FDI), and this leads to

improvement in economic output due to the processes becoming more efficient. Furthermore,

globalization allows large companies to realise economies of scale that reduce costs and

prices, which results in further economic growth. However, it can be argued that this can be

harmful to smaller businesses trying to compete domestically.

However, the general public tends to assume that the costs associated with globalization

outweigh the benefits, especially in the short-term. Some of the risks of globalization include

the rise of interdependence between nations, which can cause regional and global instabilities

if economic fluctuations end up impacting countries relying on them. Furthermore, there are

problems with equity distribution, as the benefits of globalization can be unfairly skewed

towards richer nations or even individuals, creating even greater inequalities. This can

sometimes lead to conflicts both nationally and internationally.

There are also problems associated with free trade. Free trade may drive up production and

labour costs, including higher wages for more skilled workforce, which again can lead to

outsourcing of jobs from countries with higher wages. Domestic industries in some countries

may be endangered due to comparative or absolute advantage of other countries in specific

industries. Another possible danger and harmful effect is the overuse and abuse of natural

resources to meet new higher demands in the production of goods.

There is also the risk of national sovereignty when discussing the disadvantages of

globalization. People may see the rise of nation states or multinational firms as a threat to

sovereignty, and this ultimately can cause people and even certain government leaders to

become more nationalistic or xenophobic. So the public and non-economists in many cases

are not pro-globalization, so we can begin to see why Brexit may have occurred.

However as already mentioned, there is a consensus among economists that globalization

provides a net benefit to nations around the world and therefore should be embraced on the

whole by governments and individuals. However, we know that unfortunately this is not

always the case with Brexit being a prime example of this.

For many economists, globalization may be inevitable over the long-run, however there are

always obstacles along the way in the short-run. These obstacles are usually spurred by

economic crises and negative consequences of globalization, but in the end, until recently

with Brexit, the world manages to learn that protectionism can make a bad situation worse.

So now we to look more at globalization in developed countries, and more specifically at the

UK. Industrialized or developed nations are specific countries with a high level of economic

development and meet certain socioeconomic criteria based on economic theory, such

as gross domestic product (GDP), industrialization and human development index (HDI) as

defined by the International Monetary Fund (IMF), the United Nations (UN) and the World

Trade Organization (WTO). Using these definitions, some industrialized countries are:

United Kingdom, Belgium, Denmark, Finland, France, Germany, and Japan. The World

Bank reports that integration with global capital markets can lead to disastrous effects,

without sound domestic financial systems in place. Furthermore, globalized countries have

lower increases in government outlays and taxes, and lower levels of corruption in their

governments. Therefore, it can be argued that in developed countries, globalization causes

less harmful economic effects.

So, if the UK is one of the countries that supposedly gains more of the benefits of

globalization, why did it opt to leave the EU? Which in many peoples opinion is seen as

backwards step? A lot of people believe that one of main reasons is due to controversial

matter of the free movement of labour, which is associated with globalization. To many

people the free movement of labour is seen as a benefit as it gives advantages to both

labourers and recipient countries. There are increased chances to look for work elsewhere if

the country is experiencing lots of unemployment. This labour migration also helps reduce

geographical inequality (as we have seen in the EU). It also helps countries with worker
shortages to fill up important jobs. For example, the UK itself needed to recruit lots of nurses

from eastern Europe. However, as already mentioned the issue is quite controversial. Many

people become worried that this free movement of labour can cause excess pressure on

housing and social services within their own country. In the UK for example, many people

believed their rightful jobs were being stolen by migrants entering the country. I believe this

played a large part in the Brexit result.

The protests in Seattle during the WTO meeting in 1999 were some of the first signs that not

everybody (like the economists) saw the trend of globalization and free movement etc. in

such a positive light. Seventeen years the world was then shocked by Britains rejection of

the EU. This was more than a protest against the lack of career/job opportunities and the

affordable homes that never get built, but in fact also a protest against the economic model

that has been in place for the past three decades.

Many people argue that it was the failings of globalization and the EU that resulted in Brexit.

Europe was supposed to be powerful enough to protect its citizens against the worst possible

excesses of the market. Nation states had previously been able to guarantee full employment

and welfare. The controls they put on the free movement of labour and capital ensured that

trade unions could bargain for higher pay without the threat of work being off-shored, or

cheaper labour being brought into the country. In the age of globalization, the idea was that

the EU would collectively do the job of nation states as it was too difficult individually.

However, to many people it seemed EU had failed to carry out its historic role allocated to it.

Unemployment across the Eurozone is more than 10% , austerity has eroded welfare

provision and labour market protections have been stripped away. This has resulted in a

backlash by the British people. They did not believe there was much on offer for them with
the EU system. They argue globalization has benefited a small privileged elite, but not many

of the public. In conclusion, I believe there is no doubt that economic effects of globalization

had some part to play in Brexit.