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Brexit and International Development: A Round-Up

How do you solve a problem like Brexit? There is no shortage of analysis on the fall-out of the EU Referendum on June 23rd, some of it looking at how it could affect international development. (Particular kudos to the Overseas Development Institute (ODI) and Center for Global Development (CGD) for being so quick off the mark.) I’ve collected together the best articles I’ve seen, from those looking at the direct and indirect consequences for developing countries, to those discussing the narratives behind the event and what happens.

Enjoy!

Consequences within the sector

What’s happening at DFID?

With Justine Greening now Secretary of State for Education following a reshuffle, Priti Patel has taken over as International Development Secretary. Ms Patel has previously called for the Department for International Development (DFID) to be replaced by a Department for International Trade and Development (DFITD – which would be a mouthful to say). Given the establishment of a separate Department of International Trade, this specific outcome no longer seems to be on the cards but many remain worried about the future of the department. Her first statement upon appointment seems to indicate a change of emphasis towards using aid to further the UK’s national interest.

The latest news is that Ms Patel intends to ‘leverage’ £11bn of foreign aid to build new trade deals after Brexit. Any move to explicitly help “our trading partners of the future” would likely come into conflict with targeting aid to best eradicate poverty. That said, perhaps things won’t change too much, even if the UK’s role is challenged. Jonathan Glennie offers advice to Ms Patel, warning against centralising decision-making and emphasising that “aid works when it is untied from short-term considerations, and it fails when it seeks to buy short-term economic or diplomatic gains.”

In better news, new Prime Minister, Theresa May, reaffirmed the UK’s commitment to spend 0.7 percent of national income on aid in a phone call with United Nations Secretary-General Ban Ki-moon.

What’s happening in general?

So how did this happen? Duncan Green applies the ideas in his forthcoming book on How Change Happens to Brexit, using his Context/Institutions/Agents/Events typology. He adds in Narratives and Norms, Coalitions, Dynamics and Attribution. The post is full of links and followed by great comments. Be careful not to get stuck in a trail of hyperlinks! Duncan follows up this diagnosis with a post outlining the impacts and opportunities on development and aid – again covering a lot of ground. See the section on narratives below for one response.

Don’t want to bother with all that reading? Listen to Owen Barder’s “Brexit Breakdown: What Now for Global Development? Podcast” with Rajesh Mirchandani. A taste: “It seems to me inevitable that leaving the EU will cause people to questions Britain’s commitment to working in partnership with other countries, whether as a nation we’re willing and able to cooperate. The long term depends on… what we do next.”

Consequences for developing countries

There are several ‘what does Brexit mean for X?’ posts out there.

Most obviously, the fall in the value of the pound sterling means that British aid is worth less – perhaps up to $4bn less in fact.

More broadly, ODI released a report on the impact on developing countries through trade, financial markets and investment, growth, aid and development finance, migration and remittances, and global collaboration. (Dan Gay offers a useful summary of the report). The policy implications are that the negative shock of Brexit can be mitigated through:

  1. The UK negotiating a deal that is close to existing EU arrangements to minimise the long-term impact (although the immediate effects cannot be undone)
  2. The UK maintaining an open approach to developing countries in trade, investment and migration (though this would entail preference erosion for some of the poorest countries).

This suggests a starting point for advocacy in the years of negotiation to follow.

Ken Opalo thinks that with regards to the UK-Africa Relationship, the “Brits stand to lose more”, although South Africa, Nigeria and Kenya are exposed due to trade relationships. He makes a case for African countries learning about democracy by observing the challenges it currently faces in the West. The ‘European mystique’ has lost its shine:

“The ongoing sociopolitical troubles in the West are bound to liberate the worldview of leaders and other elites in the Global South, and will empower them to mold their own societies in their own image, instead of trying to turn them into Denmarks.”

Update: Edward George explains why Africa should be at the heart of the UK’s Brexit Strategy for African Arguments. He recommends an Africa team in the new Ministry for International Trade, a strategy for UK-Africa trade and thinking beyond Anglophone Africa.

The Tax Justice Network look more specifically at the effects on tax havens and tax justice. It’s not good and could spark a ‘race to the bottom:

“A ‘Brexit’ would almost certainly see the UK itself push further down the road of tax havenry, hurting its own citizens and causing wider global damage.”

Matt Collin and Matt Juden at CGD explore the effects on remittances. Again, it’s not good news, with a weak pound, stagnant UK economy and breakdown of passporting for financial services all threatening these crucial financial flows to developing countries.

Opportunities

To their credit, many have tried to find a silver lining and have looked at the opportunities for the UK to play an important role in international development. London International Development Centre offers one such sunnier view, pointing out that the UK could build on existing ties with Commonwealth countries and negotiate development-friendly policies, while developing countries diversify their exports. The International Centre for Trade and Sustainable Development looks more closely at how this can be done with regards to trade, with CGD also offering analysis.

Joanna Rea at ODI suggests that Britain can retain its leadership role in international development with continued political leadership, delivering on international commitments and seize the opportunities to maintain and strengthen global partnerships. IIED look at ten ways to do this with regards to climate change while CGD (yes, them again!) also asks what’s next on this issue, suggesting how to go from lemons to lemonade.

Update: Alistair Burnett from Sightsavers argues that international aid is a way to show that Britain hasn’t turned its back on the world.

Changing Narratives

A lot of people (myself included) were shocked at the result and some of the most interesting articles were on the narratives and sentiment behind it.

Girish Menon, Chief Executive of ActionAidUK, offered a heartfelt plea to promote and live by the values of equality, solidarity and tolerance more than ever. We should not be silent, especially not when people who have lived in the UK for many years are being told to get out of the country.

Tom Baker of Bond has some practical thoughts for campaigners, including from getting out of the city to talk to people in the country. At least one NGO, Aid Works are already doing this by engaging northerners in international development, responding to Duncan Green’s question about whether it’s “better to pull back from the day to day trench warfare of Whitehall and go long term, working with youth, investing more in development education, working on public attitudes to race and ‘Otherness’?” with a resounding “Yes!”.

The Economist takes a step back to the global level and sees the new politics as between an open world and a closed one, rather than between right and left. In this view, Brexit is part of a wider pattern that includes Donald Trump. Tim Harford sees the lack of broad-based growth as a cause for this zero-sum politics. He ends with a warning, which runs counter to recent ideas that growth is not important:

“We should start by accepting that, if we cannot bring back broad-based and growing prosperity to the advanced economies, Brexit will not be the last political shock we must face.”

Striking a similar tone, Vijaya Ramachandran at CGD is clear that Brexit is a wake-up call for development economists who extol the benefits of free trade and open borders, while dismissing those who lose out as just needing some compensation and re-training:

“If we want to see poor countries get a better deal with respect to trade and migration, we need to do a lot more to tackle the problem of job losses in rich countries.”

So what happens next?

In case your head is spinning with all of this, the Financial Times has helpfully outlined four scenarios by which the Brexit process could unfold, from hostile divorce to change of heart (AKA wishful thinking).


I apologise if you have written an excellent piece on Brexit and international development and I haven’t included it here. Please post it in the comments below or let me know on Twitter and I’ll add it to the list.

I was away travelling in Bali at the time of the referendum so writing this has been like therapy!

Brexit in Bali: Me reading the results of the EU Referendum at the end of a bike ride near Ubud, Bali. I felt a long, long away from home.

Digesting the results of the EU Referendum at the end of a bike ride near Ubud, Bali. I felt a long, long away from home.

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