Globalisation and Economic Policy
In what ways does globalisation affect policy making in the UK ?
Key points
To some extent the inflation rate is not in the control of policy makers – note oil, commodity and food prices.
Financial markets are more interlinked than we thought before the credit crunch. Any attempts to regulate financial markets have world-wide effects. Action needs to be global.
The emerging economies (China, India, Brazil etc.) are taking increasing shares of world trade and enjoy cheap labour. This presents challenges for policy on industrial restructuring.
International capital is more fluid. Policy makers must address the need to attract such capital. It is also a highly competitive market.
Free movement of Labour in the EU has had considerable effects on labour markets, wages and employment patterns.
As corporations become increasingly global, so does the movement of more ‘senior’ management and skilled labour. This constrains policies on income taxes.
Similarly as companies are globally mobile, corporate tax policy is constrained.