CGD Podcast Summary

Episode: Brexit Breakdown: What Now for Global Development?
Host: Rajesh Merchandani (A)
Guest: Owen Barder (B)
Date: July 12, 2016

Episode Overview

This episode explores the potential impacts of Brexit—the UK's decision to leave the European Union—on global development. Host Rajesh Merchandani and CGD's Owen Barder examine likely effects of Brexit on the UK economy, development cooperation, trade, migration, and the UK's global role. The discussion is thoughtful, balanced, and framed around how policy shifts might affect poorer nations and the broader development agenda.

Key Discussion Points and Insights

1. Immediate Economic Fallout and its Ripple Effects

[00:00–03:00]

• Shrinking UK Economy:
  Owen clarifies that Brexit may slow UK economic growth, affecting not just British citizens, but also trading partners—especially developing Commonwealth countries.

  • “Expected. That's bad news for obviously for British citizens, but it could also be bad news for our trading partners in the developing world.” —Owen [01:47]

• Weaker Pound/Economic Contraction:
  The drop in the pound’s value reduces how far UK aid stretches abroad and impacts remittances sent by migrants.

  • “...the change in the value of sterling ... means that the same amount of sterling aid goes less far in terms of dollars spent across the developing world.” —Owen [01:56]
  • “That's a double hit for people who are depending on money coming from the UK to a developing country.” —Owen [02:50]

2. UK Aid Budget and Political Will

[03:00–05:12]

• UK’s 0.7% GNI Legal Commitment:
  Britain is the only G7 country meeting this aid target. The future of this commitment is uncertain post-Brexit.
  • Paradoxically, Owen notes Brexit could motivate UK leaders to maintain the aid target “to signal continuity, really in our global engagement.” [03:41]
  • Threat of Retrenchment:
    Some in the UK see foreign aid as elitist and unaffordable; this sentiment could threaten the aid budget.
    • “If that point of view ... is regarded as very powerful, then you could see a British government concluding ... people want Britain to play a less outward looking role in the world.” —Owen [04:37]

3. Migration and the 'Global Skills Partnership'

[05:12–07:50]

• EU vs. Non-EU Migration:
  Post-Brexit, net migration may decrease, but numbers from outside the EU could rise, depending on policy choices.

  • “It's possible that we'll see a reduction overall in the number of migration migrants coming to the uk, but some rebalancing with many fewer European migrants and somewhat more people coming from the rest of the world.” —Owen [06:05]

• Innovative Approaches:
  Owen champions Michael Clemens’ Global Skills Partnership, training developing country workers for UK jobs.

  • “We could fund, for example, health workers or agricultural worker training for people to come to the UK ... They could be sending money home and saving up, and return home not only much wealthier but also much wiser.” —Owen [06:44]
  • The scheme benefits both UK labor markets and developing countries, mitigating “brain drain” concerns.

4. Trade, Tariffs, and Threats to Developing Economies

[07:50–11:34]

• Lost Trade Preferences:
  Brexit endangers existing duty-free, quota-free trade arrangements ("Everything But Arms," EPAs), crucial for least-developed countries (LDCs) and lower-middle-income nations.

  • “If we just left the single market ... we would be imposing tariffs or quotas on a whole series of traditional British trading partners that are very poor countries that rely on us to be buying their exports...” —Owen [09:12]

• Need for Rapid Replacement Deals:
  Owen warns that investor confidence in poorer countries could falter if new trade preferences aren’t swiftly announced.

  • “If we don't make that clear soon, then there's a danger that investment in companies in those countries will fall off...” —Owen [10:35]

• Immediate Consumer Impact:
  The pound’s fall is already making imports more expensive; new tariffs would worsen that.

  • “The 11% depreciation of sterling means that prices for all our imported goods are going to go up.” —Owen [11:03]

5. Agriculture, Subsidies, and Policy Uncertainty

[11:34–14:10]

• Fisheries and Agriculture:
  Without EU policy, UK choices on farm/fish subsidies could go either way: more free trade (good for developing country exporters) or more protectionism (bad for development).

  • “So we don't know whether we will end up paying these agricultural subsidies... If we continue them, or if we increase them, that's bad for developing countries...” —Owen [12:47]

• Fork in the Road:
  UK could choose to be “a kind of New Zealand, open, free trading, competitive, global economy? Or ... more like France, using our resources to protect a certain way of life.” —Owen [13:26]

6. Climate Change Commitments

[14:10–16:13]

• Paris Agreement Uncertainties:
  The UK took a leadership role in the EU’s climate commitments; post-Brexit, it must decide how to maintain or redefine its share of emissions reductions.

  • “Having pushed Europe into having an ambitious agenda, we have to make sure that we continue to keep it. And we have domestic legislation which does require reductions in carbon emissions.” —Owen [15:19]

• Political Challenge:
  “That doesn't happen automatically ... is a political battle that needs to be won within the UK.” —Owen [15:33]

7. The UK’s Global Standing

[16:13–18:36]

• Diplomacy and Influence:
  Will Brexit reduce the UK’s global “punch”?

  • “It seems to me inevitable that leaving the European Union will cause people to question Britain's commitment to working in partnership with other countries... the initial impact must be some kind of reduction in our standing and influence.” —Owen [17:13]

• Two Paths Forward:
  The UK could withdraw and become inward looking or “redouble our efforts to be global citizens and to engage effectively... in making the world a more prosperous and peaceful place.” —Owen [17:45]

  • Owen believes there will be political pressure to pursue the latter, to prove the UK's continued commitment.

8. Lessons from Brexit for Globalization

[18:36–22:43]

• Neglect of Globalization’s Losers:
  Economists, says Owen, failed to push for compensation of those harmed by globalization and technical change.

  • “...we've been quite good at is making the case for ... making the cake bigger. But many economists have not pushed as hard as we need to...the redistribution of those benefits from the global benefit to compensate the individual losers.” —Owen [19:39]

• Public Services and Migration:
  Economic gains from migration weren’t channeled into supporting communities feeling the strain.

  • “If we're not using the extra taxes ... to pay for extra public services, then people experience that as more pressure on public services...” —Owen [20:52]

• Warning for Future Policy:
  If globalization’s broad gains aren’t shared with those who lose out, people will eventually move to stop it.

  • “If we don't give them some share of the benefits of it, they will eventually say that it has to stop.” —Owen [21:46]

Notable Quotes and Memorable Moments

• “Paradoxically, as we leave the European Union, we might choose to use continuing with that commitment as a way of signaling that we're not retreating from the whole world.” —Owen [03:41]
• “If we don't make that clear soon, then there's a danger that investment in companies in those countries will fall off, that people won't want to invest in countries where it's not clear whether they'll have access to our market.” —Owen [10:35]
• “Will we be a kind of New Zealand... or more like France, using our resources to protect a certain way of life...?” —Owen [13:26]
• “We have to do a better job of sharing the proceeds of both globalization and technological change, otherwise the people affected by it will bring it to a halt.” —Owen [22:23]
• “There is a strong analogy between what's happened within the UK and what's happened internationally.” —Owen [21:52]

Timestamps for Key Segments

• Impact on developing countries/trade partners: [01:37–03:00]
• Aid budget & UK’s global engagement: [03:00–05:12]
• Migration policy and Global Skills Partnership: [05:12–07:50]
• Trade scenarios and threat to export economies: [07:50–11:34]
• Agriculture, subsidies, protectionism vs. free trade: [11:34–14:10]
• Paris Climate Agreement, UK role: [14:10–16:13]
• UK’s diplomatic power post-Brexit: [16:13–18:36]
• Lessons for globalization/globalization’s losers: [18:36–22:43]

Summary Tone and Language

The discussion is measured, analytical, occasionally wry, and deeply rooted in development economics perspectives. Owen Barder is both candid and hopeful, weighing threats and opportunities pragmatically without alarmism, and consistently grounding technical details in broader political and social dynamics.

For further reading:

• “Threats and Opportunities for Global Development” (Owen Barder’s blog)
• “Brexit is a wake up call for development economists” (Vijaya Ramachandran’s blog)
• “Bad News for Remittances” (Matt Collin and Matt Juden’s blog)
  Available at: cgdev.org