Recent events such as the vote for Brexit point to a potential backlash against the globalized economy, with consequences for current trade regimes and flows of foreign investment. In a world where value chains crisscross the globe, the adverse impacts for developed and developing economies could be significant.

In this talk, Hiau Looi Kee will present a case study of how costly a rupture in the existing trade regime could be. She will draw on the Overall Trade Restrictiveness Index (OTRI)—a tool pioneered during the financial crisis to better understand the drivers of trade flows—to examine the potential costs associated with a country’s withdrawal from a free trade union. In addition to considering tariff barriers, this case study will also incorporate the costs associated with non-tariff barriers.

Kee will also discuss examples of how trade and FDI policies may affect global product networks in the event that a country fails to retain or attract FDI. Past research has suggested that the presence of FDI leads to inter-industry linkages and may help improve the domestic content in exports. Over the long run, the failure to retain or attract FDI could significantly damage a country’s export competitiveness.

Last Updated: Sep 15, 2016