Brexit: The Dawn of Globalisation 2.0

Brexit: The Dawn of Globalisation 2.0
Brexit: The Dawn of Globalisation 2.0

The notion of globalisation is not under threat as a result of Britain's vote to leave the European Union, writes a senior academic. A day after the crucial Brexit Vote, it seemed the world had opened its eyes to a new world. An island within Europe had willingly decided to split from the European Union (EU) forever. Soon after, while there was opposition and emotional outcry by people who were not observant of current realities. Brexit isn't as surprising as it seems in the first instance. Change has always been coming and so it will continue, for good or bad. The only way to be successful, for every individual, business or country, is to evolve and adapt to new realities. In the age of millennials, we have witnessed a paradigm shift, and what we are observing now is the evolution of relationships between individuals, businesses or countries in almost every part of the world. This evolved form of reality has been visible wherein these entities want to stay 'connected', without staying 'close'. This porous or transient form of connectedness is becoming visible in all forms of everyday life. The verdict of the Brexit referendum has only made its invisible hand visible. It's a new reality that people will have to get used to. The burning questions are: 'what will be the new forms of economic and emotional reality ', and 'how can we make it work for a better world ' The neo-globalisation or 'Globalisation 2.0' will evolve visibly, wherein the transactional cost and benefits of one connected world will still remain intertwined as before. We will just experience changes in models of engagement, wherein the use of information technology or platforms will become more significant in creating, developing and sustaining entities. The notion of globalisation will continue to prosper. The new models will be resource intensive and expensive to start, but entities will have to adapt for survival, eventually. The process of Brexit, although painful, will involve a series of negotiations between the UK and EU wherein each and every aspect of future economic and social relationship will be negotiated and considered strategically. Due to its complexity, the two-year timeline to re-negotiate a workable partnership seems like an extremely formidable and almost impossible task to achieve. Because of this timeline, the EU already has an advantage in negotiations as there is no time pressure from their side to find a workable solution. If the preamble to negotiations is anything to go by, the EU has already set out a clear definitive strategy, however, it's a different story from the UK's side. Currently, the UK Government has lost its majority in the gamble to achieve a bigger mandate within Parliament. The strong feeling of the younger generation is that they want to stay connected while the older generation fears immigration. Now, the UK government needs to work resourcefully to integrate a divided country internally and build trade agreements externally. As per the Office of National Statistics (ONS) data (2009-2016), the UK imports approximately £237 billion and exports approximately £143 billion from European Union countries and in the absence of a mutually acceptable trade agreement they might have to rely on WTO agreement as a backup which could potentially be an economic disaster. The challenge is even more complicated as issues associated with entangled immigration (emotions) and trade agreements (cognitive rationality) are coming to the forefront. Outside Europe, the US and China already appear in the top 10 destinations for export/import and are the countries where the UK already has several bilateral agreements in place. Technically, if the UK left the EU without any agreements, its relationships with the EU would be much weaker than with any other EU country. To avoid this cliff edge, the UK needs to create a bigger economic buffer and build relationships with non-European economies to adapt during 'Globalisation 2.0'. The UK government needs to act with urgency, wherein they need to stabilise and be outward looking beyond current relationships. They have some agreements in place but to a much lesser extent than the potential the joint partnership holds. UK-India as strategic partners for future Trade agreements with emerging countries like India might be the extra push required to help get out of the valley of despair. India is one of the fastest expanding economies and the second-largest labour force in the world. Closer ties with India will be a strategic value proposition in the future of UK. In the short term, partnerships and trade agreements can help the UK achieve a good deal with the European Union. In the long term, it's a much bigger proposition for UK industries to prosper in the East. India will return more capital and 'future proof' the UK economy. There is huge untapped potential for the UK and India to create a shared market and work together in the future. As per the ONS data, India doesn't feature in the top 20 countries which the UK exports to and is 17th in terms of imports. India's population is 1.3 billion (more than a sixth of the world′s population), which is projected to be the world′s most populated country by 2025. More than 50 per cent of its population are below the age of 25 and more than 65 per cent are below the age of 35. It is expected that by 2020, the average age of an Indian will be 29 years old, compared to 37 for China and 48 for Japan. As per the International Monetary Fund (IMF) forecast, the Indian economy is growing at around 7 per cent and according to recent data, faster than China. Services are the main source of economic growth in India today, making up approximately 55 percent of the country's GDP. Its political and economic reforms have supported this economic growth. India is growing irrespective of recession and the turbulent political environment worldwide. The global perception of India is changing in line with the economy. Ease of doing business is improving. Internally, they have launched several new initiatives (e.g. 'Make in India', 'Jan Dhana Yojna' and 'Swachh Bharat Abhiyan') to support its growth ambitions. To fulfil these ambitions, there are several mutually beneficial sectors in which the UK can share its expertise and create strategic partnerships with India - specifically in digital innovation, financial and legal services, energy & climate, healthcare, infrastructure and skills education. These areas have potential to deliver a stronger future for both the countries. There are already established foundations between these two countries which can help them succeed in future partnerships. The UK and India have a shared history of over 200 years and several Indian business groups have already established their business empires in the UK. Today, Indians are the single largest ethnic minority in the country. In a neo-globalised world, concrete UK-India partnerships could be the perfect example of the co-creation of a shared economy bridging developed-developing and east-west economies together. Dr Sankalp Chaturvedi is Director, Gandhi Centre for Inclusive Innovation, and Associate Professor, Imperial College Business School.

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