Business Politics

Impacts of Exiting from an Economic Union – The Case of BREXIT

According to the Business Dictionary, Economic integration is an agreement between countries in a particular geographical region to reduce and ultimately eliminate the tariff and non-tariff barriers to facilitate free flow of goods, services and other factors of production among the countries engaged in such an agreement. In such an arrangement countries coordinate their trade, fiscal and monetary policies with the aim of increasing each country’s GDP and finally enhancing and improving the welfare of the citizens in these countries.
Basically, an economic union grows from the simplest stage known as a Preferential Trade Area (PTA) or what’s commonly known as a Free Trade Area (FTA) through Monetary Union and into an advanced level of Political Union. Joining an economic union is not simple and also exiting from the union is not an over the counter transaction.
Currently, we are witnessing the project effects of Britain’s exit from the European Union among the immediately displayed being a political crisis where the Prime minister David Cameron announced that he will be resigning from the said post as he strongly opposed the Brexit move to pave way for another person who is in support of the move.
A series of serious implications of this move are expected to take at least a decade to show up. Among the challenges projected to occur are serious economic and social crisis which may result from disagreement among the political powers. Among the projected social crisis to be witnessed are poor international relationships among the UK member countries where we have witnessed some of them such as Scotland presenting their grievances and even noting that they make disintegrate from the political bloc.
From an economic perspective, all the three pillars that is the political pillar, economic pillar and the social pillar are all interconnected and thus tampering with any of them results to imbalances in the system. According to the pareto optimality condition, you cannot make someone better off without making someone else worse off. In this regard I view the move by the Britons as a pareto inefficient allocation as many of the EU member countries are expected to be worse off including Britain itself.
Munene Erick
Munene is a top-notch and passionate economist who is confident in his ability to derive clarity, insights, and knowledge from data. He has a vast interest in the economics field. The courses he cares about include: Economic empowerment, poverty alleviation, Education, Environment and Community service. He holds a Bachelor of Economics and statistics of Kenyatta University with an on-going Master of Economics (Policy and Management) in the same institution.

2 Replies to “Impacts of Exiting from an Economic Union – The Case of BREXIT

    1. Considering the recent shifting in global business and trading, Kenyans should be worried and should start looking for markets (be it labour or goods and other services) elsewhere. This is because in the event Britain manages to exit from the European Union I can forecast that they will be using more of protectionism mechanisms and imposing policies related to such to safeguard the interests of their citizens. Therefore, we expect more shifting in the labour and commodities markets. On the other hand, they are likely to take more and calculated moves in dealing with countries and states where they have vested interests or where long-run benefits may accrue.

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