To take a closer look at the implications of ‘Brexit’, I asked Assistant Professor Swati Dhingra, of the Department of Economics and Centre for Economic Performance at the London School of Economics a few questions. Here’s our crash course. Of course, I took the opportunity to slip in a question related to to gender equality and academics.
1. For Indians who aren’t clued in to the discussions happening in Britain re the Brexit, can you summarise some of the key points? And why this will affect people beyond just Europe?
Britain will go to the polls on June 23 to vote on remaining in the EU or leaving the EU. The main argument given in favor of leaving is that it would give back control of many policies which are currently decided at the EU level.
For example, Britain can restrict immigration from EU countries like Poland if it leaves the EU and it would also be able to get rid of EU regulations that businesses have to comply with even if they do not sell to the EU. National sovereignty can certainly be restored if Britain votes to leave the EU. But it will come at an economic cost because exiting will also take away Britain’s access to the EU’s single market.
As a member of the EU, Britain is part of Europe’s Single Market which means goods and services can be freely traded between Britain and the EU. People can travel without many restrictions and firms can raise money anywhere in the EU. The EU also negotiates on behalf of Britain in trade agreements with other countries.
Withdrawal of the United Kingdom from the European Union, often shortened to Brexit
An overwhelming majority of economists agree that British incomes will take a big hit if Britain leaves the EU. The EU is Britain’s largest trade and investment partner, and leaving the EU would increase the costs of doing business with the EU.
The LSE estimate is that reduced trade would directly lower British incomes by about 2.6% and in the long-run reduced openness to the EU could harm British incomes by as much as 6-9.5%. To put this number in perspective, Britain suffered a loss of 7% of GDP during the recent financial crisis.
One of the main arguments of the Leave campaign is that after getting out of the EU, Britain would be free to negotiate trade agreements with the United Sates, China and India.
Currently, the EU-India bilateral trade and investment agreement is being negotiated by the EU. The big issue for India here is that it wants to negotiate some amount of mobility for Indian workers to provide services in the EU. It should also ensure that it doesn’t give up too much on industrial policies like IPR. I think it’s unlikely that negotiating with Britain alone is going to make this happen more easily.
In fact, countries like India would also be impacted by a Brexit because it would reduce trade and increase economic uncertainty in the EU, which is India’s biggest trade and investment partner.
Watch an interview here : Swati Dhingra of the London School of Economics talks about the key economics of Brexit, in an interview recorded at the Royal Economic Society annual conference at The University of Sussex in Spring 2016; produced by Econ Films.
2) There have been some concerns voiced by India about Britain tightening visa norms for skilled workers — How do you see this playing out, and what’s the likely impact, from your perspective?
Unfortunately, there is a lot of misinformation about the economic impact of immigrants. The economic concerns about immigration are not borne out by the data.
For example, EU immigrants have not harmed British wages or employment levels. But this myth pervades the public debate and is now also getting mixed up with people’s anxiety over the Syrian migrant crisis in Europe.
It’s unlikely that Britain will have an open immigration policy towards skilled or unskilled immigrants. There is generally very little appetite for increased immigration in Britain.
I think the deep pool of skilled workers in Britain has always been a great economic strength for the country in attracting investments. Tighter restrictions on skilled immigration will not help Britain’s economic situation in the medium run. In the long run, Britain would need to invest in deepening the domestic skill pool, but the current levels of investment in this are not adequate.
3) On another note… Have you ever faced any bias or discrimination based on your gender?
Absolutely. This is a constant every day battle. I used to manoeuvre around it somewhat gently, till my friend, Anita Raghavan, in her convincing writer style made me see the futility of staying quiet. So I am trying to push myself to be more vocal and one day I might even get to the point of just calling people out on it right there and then.
We need to make sure that female voices are heard, not just in female-centric economic issues like family welfare programmes, but in bread and butter economic debates like minimum wages, industrial policy, public finance.
4) What are a couple of things about LSE or academia that people don’t generally know, that you can share!
Academia is one of the most sexist environments, Economics is probably the worst. Among the 76 Nobel laureates in Economics, only one is female. The attrition rates for female undergraduates, graduates and academics continue to be very high, even worse than in the natural sciences. This is a scandal but it can’t be fixed unless we take charge of doing that. We need to make sure that female voices are heard, not just in female-centric economic issues like family welfare programmes, but in bread and butter economic debates like minimum wages, industrial policy, public finance.
Video Credit : Swati Dhingra of the London School of Economics talks about the key economics of Brexit, in an interview recorded at the Royal Economic Society annual conference at The University of Sussex in Spring 2016; produced by Econ Films.