Implications of Brexit on Developing Countries

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Brexit started on March 29, 2017. Due to the strong economic, social, and legislative interconnection of the United Kingdom (UK) with the European Union (EU), Brexit opens a “Pandora’s Box”, as no Member State has ever decided to exit the EU. However, a series of effects have been already assumed. Specifically, and in addition to the future EU-UK relationship, Brexit might also modify the existing landscape of trade agreements between the UK and EU’s existing trading partners. Following this same logic, Brexit will also mean that the rest of the world will no longer have preferential market access to the fifth largest market for imports in the world.

Therefore, there are a number of risks associated with the UK’s exit from the EU, affecting not only the concerned parties, but also the rest of the world. The potential economic slowdown would have major implications for international trade flows, even though the analysis does not include risks of contagion, which would further exacerbate the results. Nevertheless, as with all changes in policy, a number of opportunities also arise for developing countries.

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