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Free Trade Agreements and Inequality: The Prospect for the UK Post-Brexit

Author

Listed:
  • Osama Alfalah

    (Gulf University for Science and Technology, Kuwait)

  • Mohammad Ali

    (The American University of Kuwait, Kuwait)

  • Abdullah Alhammadi

    (Independent Researcher)

Abstract

This paper examines the potential effects of Brexit on income inequality in the United Kingdom (UK) and utilizes empirical methods to predict these effects. The study focuses on the impact of trade and Foreign Direct Investment (FDI) on income inequality, using macroeconomic data from 1971 to 2019. By employing cointegration techniques and an Error Correction Model (ECM) on annual time series data, the analysis reveals that higher levels of trade have historically reduced income inequality in the UK over the long term. Consequently, changes in trade resulting from Brexit are expected to have a negative influence on the distribution of income and wealth in the UK. On the other hand, the study finds that higher FDI has only had a short-term negative effect on income distribution in the UK.

Suggested Citation

  • Osama Alfalah & Mohammad Ali & Abdullah Alhammadi, 2024. "Free Trade Agreements and Inequality: The Prospect for the UK Post-Brexit," International Journal of Economics and Financial Issues, Econjournals, vol. 14(4), pages 245-252, July.
    • Handle: RePEc:eco:journ1:2024-04-27
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Brexit; Inequality; Trade; Foreign Direct Investment; Free Trade Agreements;
    All these keywords.

    JEL classification:

    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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