Brexit, as many will know, is the withdrawal of the United Kingdom from the European Union, a motion that has caused a dramatic divide within the British Public, one that will not be healed for many years to come, due to the overwhelmingly negative economic impacts of the deal. As the LSE Blogs correctly states, “The more the UK distances itself from the EU’s economic institutions and policies, the greater the increase in trade barriers and the higher will be the costs of Brexit.” It is debateable as to whether the British government can afford the cost of Brexit, especially when this economic crisis has been exacerbated by the current pandemic, which has caused irreparable damage to the British economy. When discussions about leaving the European Union sparked, the HM treasury analysis on the immediate economic impacts concluded that within just two years: the GDP (gross domestic product) of the UK would decrease by at least 3%; Britain would experience a year of negative growth, placing the country into a recession and most importantly, over half a million of jobs would be lost. Knowing this, why did the British government go forth and encourage this plan of action? Many would argue that this was a simple answer . Polls conducted by the British government concluded that those who voted ‘Leave’ believed “the principle that decisions about the UK should be made in the UK’ and that leaving ‘offered the best chance for the UK to regain control over immigration and its own borders’, a social, economic and political issue that had been debated in parliament for many years. But how has Brexit changed these immigration laws? Previously, EU laws stated that one of the four freedoms enjoyed by EU citizens was the free movement of workers. This meant that workers could move to a country within the EU, with his/her family, taking up another job within said country. This was a key issue that the majority of the British public opposed. When Britain left the EU on December 31st 2020, the government finally put an end to the act of free movement, via the Immigration Bill. As stated on the governments website, the Bill consists of 7 clauses and three schedules which apply to entire UK population. While the Bill would repeal free movement in UK law, it would not set up the future UK immigration system. The future system will be implemented in the Immigration Rules. Although this movement would potentially create jobs for the British public, it is not without its economic challenges. A study conducted by Warwick Business School concluded that the UK economy relies on migrants, many of which fill low-skilled, but necessary jobs around the country. Migrants from the 10 central and eastern European countries that joined the EU in 2004 and 2007 made a net contribution of almost £5billion to the UK economy in a decade- money that the UK government cannot afford to lose in such pressing times. The economists who conducted the study claimed that the South East would be the hardest hit due to the fact that 35% of all UK migrants live in London. The WBS website states that “the Government could have to abandon austerity and its cap on housing benefits to convince people to move from the north to the south of the UK, or introduce more draconian benefit sanctions to force workers to relocate” in order to accommodate for the loss of the working immigrants. Now that Brexit has “resolved” the important conflict of immigration laws that the British government opposed so strongly, it is up for debate as to whether the UK citizens are relieved and still agree that leaving the EU was the best plan of action for Britain.
The UK exit (Brexit) from Europe can be considered a major negative shock to the UK economy with the economic fallout in the rest of OECD (organization for economic Co-operation and Development). Brexit is akin to a tax on GDP, imposing a rising cost on the economy which would not be incurred if the UK remained in the EU. The shock can be transmitted through several sectors that would change in relation to the time’s horizon. In the near term, the UK economy is hit by tighter financial conditions and weaker confidence; after a formal exit from the European Union, there will be higher trade barriers and the mobility of labor forces will be restricted. By 2020, GDP is over 3% smaller than otherwise (with continued EU membership), equivalent to a cost per household of GBP 2200. So, structural impacts can take hold through the channels of capital, immigration, and lower technical progress. In particular, there is the possibility that labor productivity will decrease because of a drop in foreign direct investment and a smaller base of skills. The extent of foregone GDP is increasing over time. By 2030, in a central scenario, GDP would be over 5% lower than otherwise – with the cost of Brexit equivalent to GBP 3200 for households. The effects would be larger in a more pessimistic scenario but remain negative even in the optimistic scenario. Brexit would also hold back GDP in other European economies, particularly in the near term resulting from heightened uncertainty about the future of Europe. In contrast, continued UK membership in the European Union and further reforms of the Single Market would enhance living standards on both sides of the Channel. This way the UK would:
- Continue to have preferential access to thor-country markets, which will be lost as a result of Brexit. Negotiating new trade treaties with countries will take time.
- Most likely have a stronger economy. Due to Brexit, the economic incentives for people to migrate to the UK will gradually decrease.
After the collapse of the USSR, Georgia experienced an economic crisis. In the USSR, it was known as one of the most beautiful republics of the Soviet Union. The cobblestone-lined streets of Tbilisi and the scenic mountain views of Kazbegi, attracted millions. However, after the downfall, there were no tourists. This was just a piece of what Georgia lost, of course it lost Abkhazia and South Ossetia too. The country slipped into civil war, millions lost their jobs, factories closed, and inflation rose exponentially.
GDP Deflator, Inflation, World Bank, CC BY-4.0
GDP Per Capita [PPP], current US$, World Bank, CC BY-4.0
This led to most of the economy shutting down, and millions going hungry. After 1993, Georgia went through en masse political unrest, and there were some reforms, but it was after the Rose Revolution that the economy witnessed severe changes. During Saakashvili’s reign, he made sure he grew the economy and this is seen by GDP per Capita rising. It was then that investment into Georgia rose, tourist arrivals, and the lost industry developed. Shown by the graphs below.
International Tourist Arrivals, Data from World Bank, CC BY-4.0
FDI Inflows into Georgia [in % of GDP], World Bank, CC BY-4.0
Saakashvili promised economic reforms and delivered, however, he did turn into a totalitarian, Draconian dictator. In 2008, Georgia fought over its territory. Nonetheless, one of his most important legacies were reducing corruption, increased trade, development — e.g., making it easy to do business — and cooperation with the west. Then came another party, which continued his legacy, and continued to develop Georgia with the same tactics he had used — for example the IT sector, and exports. [Happened because of the country’s low crime rate increasing investor psyche, therefore giving them the thumbs up to invest].
Georgia’s trade rating 2005-2013, [1 = low, 6 = high], World Bank, CC BY-4.0
Georgia’s Exports in Billions [current US$], World Bank, CC BY-4.0
Two years ago, Georgia crossed into the very high HDI category. This marks a new era as the country prepares to potentially enter the European Union in the future, and enhances its relations with Brussels. But it stands testament to the Georgian miracle. By far, Georgia is not like the Korean, Singaporean or Japanese miracles, but its fast rise from a war-torn nation in the 1990s to a modern, prosperous, free republic in the Caucasus is miraculous albeit a small victory, but compared to other former-soviet states, and one with no resources, Georgia is a celebratory success story.
Tesla this year sold shares worth a total of 5billion US dollars. DoorDash, a food delivery company, raise 3.4billion US dollars in an IPO, meanwhile in Hong Kong a digital medicine star by the name of JD health had an increase of 50% in their trading after their 3.5 billion US dollar IPO. Airbnb has had an evaluation of 40 billion US$. Worldwide, 800billion dollars of equity have been raised by non-financial firms.
Currently, in Russia’s political system, the President of Russia, Vladamir Putin, is head of state and of the multi-party system, with executive power exercised by the government. The government is further headed by the Prime Minister, Mikhail Mishustin, who is appointed by the President, with Parliaments approval. Recently, Russian citizens have been introduced to the ‘New People’s Party’, which was registered with authorities during March 2020. By August, the party saw a staggering 300,000 Russian’s signing nomination papers for their candidates, with the party aiming to put up 100 candidates in 13 of Russia’s regions. The party was originally founded by Alexey Nechayev, a businessman who is also the founder and driving force behind the beauty and apparel company, Faberlik. The parties ideologies include Reformism, Communitarianism, Direct Democracy and Liberalism, all of which have grasped the attention of the Russian citizens. New Peoples Party has now become the most successful political project among the vast variety of new parties that emerged simultaneously around a year ago. After the election on September 13th, the New Peoples Candidates won seats in four regional parliaments and the city council in Tomsk. Nechayev says “[they] barely failed to make the cut in Krasnodar, falling short of the 5 % barrier needed to be elected a city council by a hair”. The party signals hope and candour within the country, as they aim to do politics, ‘the normal way’, by rejecting the ‘one-size fits all’ traditional Russian policy. The Party’s programme calls to make small but necessary improvements including: doubling the salary and improving social insurance packages for police officers, combatting low level corruption; keeping taxes low for the self-employed and many more. The party has, however caused tension and feelings of unease to rise throughout the political system, leading to the recent attempted murder of Alexey Nechayev himself. Many of his supporters have blamed the Kremlin, however all accusations have been denied. Should the Kremlin feel threatened by this new and upcoming party?
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Wai Wai Nu is a leading voice for human rights and peace within Myanmar, her home country. Her story began after being convicted as political prisoner in 2005, where she wrongfully suffered 7 long years within a Burmese correctional centre. Wai Wai and her family were incarcerated because someone close to them opposed the Junta, which was a political group that ruled the country of Myanmar after taking power. After being tried in a closed court with no legal representation, Wai Wai understood the severity of the unjust and unequal regulations that thrived within this country; she began to prepare to change this. At just the young age of 18, Wai Wai Nu began devising her plans, while incarcerated, to continue fighting for Human Rights, equality and peace, once she had been released. The thick walls of the prison and iron bars couldn’t tear away her determination to ensure freedom and human rights throughout Myanmar, for all. Now released, Wai Wai is the director and founder of the Women’s Peace Network, where she aims to build peace and mutual understanding between ethnicities, while advocating for the rights of ostracised women in Burma. The Women’s Peace Network, is a society compiled of lawyers and peace and human rights activists from Myanmar, together lead by the inspirational Wai Wai Nu, they aim to peacefully and successfully promote and protect the human rights of those who are not subject to equality within their communities. Wai Wai Nu is just one of the many inspirational women who have lead important political movements around the world. Without the conversation that she started, change would never occur. Many Burmese people owe their freedom to the continual work of Wai Wai Nu and her family. “I am not free. My community is not free. My country is not free,” but I believe with the tireless efforts of Wai Wai and many other human rights activists, we may one day live in a world where equality is commonplace and not something towards which we strive.
On the 12th of October, american economists Paul Milgrom and Robert Wilson were awarded the 2020 Nobel Prize in economics. The two professors are based at the University of Stanford and were recognized for their work in auction theory. This new theory describes new formats for auctioning many interrelated objects on behalf of a seller motivated by doing good for society rather than simply achieving the highest price possible. These formats were used in 1994, when US authorities wanted to fairly privatize radio broadcasting stations throughout the country. The new development is all about avoiding the ‘winner’s curse’, this phenomenon has the tendency for the winning bid of an auction to exceed the true worth of the item.
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