Does trade integration in Global Value Chains go hand in hand with anti-globalization sentiments? A regional analysis of the Brexit referendum

University essay from Lunds universitet/Ekonomisk-historiska institutionen

Abstract: Globalization has intensified interdependencies between countries, generating both winners and losers from trade in Global Value Chains. While economic theory predicts a net welfare gain from international trade on the aggregate level of an economy, geographical differences on the regional level and the need for territorial redistribution policies have been neglected, causing political backlashes. This study scrutinizes disparities within the UK and presents evidence for a positive relationship between a region’s ‘Leave’ vote share in the Brexit referendum of June 2016 and the foreign value added share in the region’s final output, an indicator for the extent of offshoring activities and thus, regional economic insecurity. Hence, the study suggests that economic geography in terms of a region’s exposure to offshoring has contributed to the voting pattern. The finding adds to the existing literature, explaining why anti-globalization sentiments have been expressed to different extents at ballot boxes across UK regions.

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