Impact of Brexit on UK and Morocco: An Assessment of Economic Trade

This essay explores the economic impact of Brexit on the trade relationship between the UK and Morocco, analyzing the changes in trade regulations and laws, the role of both countries in the world economy, and the trends in foreign direct investment and foreign value-added activities. It also applies relevant economic trade theories and discusses the implications of anti-globalization critique.

International strategy
management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................6
.........................................................................................................................................................6
REFERENCE .................................................................................................................................7

INTRODUCTION
International strategy management is defined as process of developing and defining the
international strategy which can help to attain the business goals and maintain the good
performance. The aim of organisation is to expand their business across the national border so it
can compete internationally (Latorre, Olekseyuk and Yonezawa, 2018). The present essay is
prepared to define the assessment of economic impact of Brexit where it states how businesses of
other states belonging to EU are closed due to Brexit. It has affected the trade relationship
between two countries such as EU and UK where trade rules are changed which become difficult
for opposite states to continue the business. The points which are considered in this based on
economic theory, financial and economic measures by involving FDI and GDP that can help to
understand the Brexit situation between two countries that are UK and Morocco. Morocco is a
North African Country bordering the Alantic Ocean and Mediterranean Sea which is
distinguished from European cultural influences. This essay will provide understanding about
Brexit and Uncertainty which has caused, how Brexit affect the UK and Morocco in case of
Brexit, role of country in world economy, foreign direct investment trends (FDI) and foreign
added values activities by using OLI paradigm. Moreover, economic trade theory like as absolute
and comparative advantages being used in evaluation of economy of countries.
MAIN BODY
Brief background context- what is Brexit and the uncertainty it has caused
Brexit is the withdrawal of UK from the European Union which was referendum in June
2016. When there was voting for withdrawn then received 52% votes in favour and This is a
kind of war and changes in trade regulation which made by government for running their
business according to new regulations. Different regulations and laws which are mode by WTO
(World Trade Organisation) for running a business between two countries are required to be
followed that allows business industries to continue the import and export activities. This is
important for all countries and EU states to follow the trade regulations and laws while operating
the business in other European countries (Luthans and Doh, 2018).
Morocco is a North African country that is operating business in their country. This
country has signed a trade deal with UK on 26th October 2019. For running a business after
Brexit it become compulsory to follow all trade regulation which are formulated by government
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and allowing import and export under defined regulations. The government of Morocco and UK
signed an agreement to ensure that trade between such two countries will continue smoothly.
Morocco is an important emerging market that has been identified as part of a group of fast
growing nation. The Trade department of UK and Morocco has entered in to agreement where
they allowed to operate and manage the business activities. The Department for International
Trade (DIT)Morocco export adviser has given the free consultation that states in certain areas
both countries are allowed to trade. The chosen country has several free trade agreements which
are applied different countries such as EU, Turkey, Tunisia, Egypt, USA, Jordan and across
Africa (Armstrong, 2018).
The ways in which Brexit will impact UK and Morocco. The terms of trade agreements as well
as the benefits to each economy
Brexit is the situation in which United Kingdom withdrawal from European Union. It is
argued by prime minister that as UK works as per rules of EU, negotiation is straightforward. It
is just not trade which requires to be sort out as UK is set to leave schemes and operations that
are implemented by EU. It will impact many countries including United Kingdom and Morocco
in many ways. In context to UK, Brexit will impact in enhancement of costs related to travel,
communication and many more. Moreover, UK have to pay billions in euros for divorce bill and
new trade agreement can raise tariffs resulting to situation of inflation (Wilson, 2017). Despite of
the negative impacts, some of the positive impacts of Brexit on UK are increase in small and
medium size businesses, greater long term economic growth, less corruptions, lower real estate
prices, making exports of the country more competitive in world and more accountability to
political system.
Morocco is UK's 15th ranked supplier as well as 7th ranked customer. If Britain continues
to go ahead and leave EU then it have high chances to impact on Morocco. It will have tsunami
effect on economy of Morocco as 0.1 point of its total GDP. Moreover, it will decline economic
position of the nation addition to decline of goods that are manufactured in the nation. The
political system of Morocco sees Brexit as opportunity to develop that impacts positively on its
way to operate (Ipek, 2020).
After decision of Brexit, government of UK have signed a trade as well as political
continuity agreement with government of Morocco for ensuring that trade among the two nations
will continue in best possible manner (Foreign & Commonwealth Office and et. al. 2019). The
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terms of trade agreements includes ensuring business and consumer advantages from continuity
access, trade worth of £2.5 billion and accounting to £109 billion. The other terms includes tariff
free trade of industrial commodities and liberalisation of trade in agri food, fisheries and
agricultural products. The benefits of trade agreement to economy of UK is that improvements in
market access for products and services, greater access to complete priced products, new
technologies together with innovative practices. At same time, Morocco' economy experiences
benefits from the trade agreement comprises of raising purchasing powers of won income, rise in
surplus for consumers and breaking of domestic monopolies.
The countries roles in the world economy
In the world economy role of UK as British government is wider as it is allowing many
countries to import and export the products freely that can help to fill the requirement of people
who are living and make them happy. Since a conservative - led government came in to power in
2010. the rate of exports in UK have grown by 38.1% which is approximately 6% per year. And
increases the services exports of 54.8%. in chosen country.
The another country is UK which is withdrawn from EU is playing an important role in
world economy. The economy of Morocco is considered as relatively liberal economy governed
by the law of supply and demand. The country is recorded as highest growing in tourism,
telecom, textile and services sectors which helps to increase the employment opportunities for
people. The GDP of Morocco depends on weather which changing. This is managing all
activities and functions accurately to make the strong economy. The GDP rate of chosen country
is increasing which is 4.8 and per capita it is 3,656. The agriculture sector employs nearly 37.9%
of the workforce and contributing to 12.3% of GDP (Jackson and Shepotylo, 2018).
Foreign Direct Investment (FDI) trends and foreign value-added activities by apply OLI
Paradigm
By using a OLI Framework, Foreign Direct investment (FDI) in UK were £49.4 billion,
down from £80.6 billion in 2017 and value of inward FDI in the UK was £1.5 trillion, up from
£1.4 trillion in 2017. The UK is among top 6 foreign investors activities in Morocco that allows
exports in iron and steel, aircraft and spacecraft, man made staple fibres, minerals fuels, oils,
vehicles, nuclear reactors, boilers, machinery, mechanical appliances, instrument and apparatus,
knitted or crocheted fabrics, beverages. Spirits, vinegar, organic chemicals, plastics and its
products. After Brexit, it become an opportunity for UK and Morocco to provide free
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international export sales leads across the worldwide network (Latorre, Olekseyuk and
Yonezawa, 2020).
Both countries UK and Morocco are getting ownership advantages by overcoming the
liability of foreignness. In this, owners allows possession of certain valuable, rare and hard to
imitate resources which can help country to manage their import and export. This can also help
to manage the business activities by following Brexit regulations which was amended (Nouaim
and et. al., 2019).
UK and Morocco are different countries who have entered in to new market as they
provides the different products and services at many locations which gives the location
advantages by operating smoothly. Porter's Diamond model is uses to set the geographical areas
for expanding business. In this, management are producing products in home country and
exporting in others by assuming there is high demand in foreign market (Nelipa and
Batrymenko, 2018).
By providing licence and FDI management, countries look to the final advantages that is
internationalisation which can help to make the strong economy. This is more attractive to
perform value chain activity in home country (Tang and Gudergan, 2018).
Therefore, from the OLI Framework, it has defined that after Brexit UK and Morocco has
entered in to an trade agreement where they have selected the key resources and value chain
which can help to operate the business in international market. Both countries analysed the needs
of people who are living and fill their requirement which helps to get the competitive advantages
(Aggarwal and Kapoor, 2018).
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Application of appropriate economic trade theory
Competitive advantage theory is one of effective theory that is applied in economies of
UK and Morocco. The theory suggests that the nations are better off when decisions are devised
on the basis of competitive advantages at different levels of economy (Bel, 2018). It relies on
fundamental assumptions that adequate opportunities of growth are available to them who have
potentials to engage in leveraging competitive benefits to the extent they optimise own
competences. In case with economy of UK and Morocco, application of competitive advantage
theory it can produce products at lower opportunity cost than other nations. Similarly, the theory
is applied in Morocco to understand about competitive benefits that it posses because of
availability of certain factors related to factor conditions, demand conditions, firm, strategy and
rivalry. It also helps in explaining the ways government guide and shape strategy concerned with
approaches of investment and operations within the national market. \
The inclusion of relevant company or industry examples
Open shop is an supermarket of Morocco that is operating business by managing all
activities and functions in domestic country. This organisation wants to expand its business by
entering in to foreign market so it has entered in to re-engagement with UK regulations for
increasing number of customers and sales. The another example, is Tesco which is larger
organisation in UK operating business in other country where it has entered in to Morocco
country to manage the activities and improve the economical condition. Both countries are
applying the international strategies to regulate and operating the business where they provide
the different types of products to customers according to their culture (Moore, 2018).
Other relevant considerations which have relevance for two countries
Anti globalisation critique have much relevance with UK and Morocco. Anti
globalisation refers to an umbrella term which is used for group of distinct protest causes such as
child labour, environmentalism and many more. It is another name of social movement which
supports international cooperation and interaction that causes negative and positive effects to
nations. It involves enhancing integration of nations' individual economies, impact of ordinary
population of large businesses and effects related to cash flows in economies. In context to UK
and Morocco, both have relevance of anti globalisation critique as it resulted in exploitation of
poor, workers along with environment of both nations. Because of anti globalisation, both
countries have to act with limited accountability (Antentas, 2016). It is also claimed that
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individual cultures of UK have became empowered by other nations. Due to anti globalisation,
movement of people of both nations is controlled strictly, limited or no permit to human
resources, permanent damage of biodiversity as well as natural resources and wider egalitarian
states. It have affected social securities and resulted in death of various citizens of Morocco
because of extremist actions of demonstration operations. Many actions are executed by
governments for controlling extremist activities. Despite of this, many activities became stagnant
and ignorance of many social welfare.
CONCLUSION
From the above report it can be concluded that Brexit is defined as abbreviation for
“British exit” which is referring to the UK's decisions in a June 23, 2016. This has impacted on
trade agreement between countries where it become compulsory for countries to follow the trade
rule and expand business accordingly. OLI paradigm is uses to get advantages of ownership,
location and internationalisation. Countries are plating important role in world economy and
Brexit has effected the businesses.
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REFERENCE
Books and Journal
Latorre, M. C., Olekseyuk, Z. and Yonezawa, H., 2018. Trade and FDI-related impacts of
Brexit. Available at SSRN 3168434.
Luthans, F. and Doh, J. P., 2018. International management: Culture, strategy, and behavior.
McGraw-Hill Education.
Armstrong, K. A., 2018. Regulatory alignment and divergence after Brexit. Journal of European
public policy. 25(8). pp.1099-1117.
Latorre, M. C., Olekseyuk, Z. and Yonezawa, H., 2020. Trade and foreign direct investment‐
related impacts of Brexit. The World Economy. 43(1). pp.2-32.
Jackson, K. and Shepotylo, O., 2018. Post-Brexit trade survival: looking beyond the European
Union. Economic Modelling. 73. pp.317-328.
Nelipa, D. and Batrymenko, O., 2018. Strategy, management model and educational scientific
civil servants training program in postgraduate studies of the university. Науковий
вісник Національного гірничого університету. (2). pp.178-183.
Tang, R. W. and Gudergan, S. P., 2018. A Meta-analysis of the International Experience–
Ownership Strategy Relationship: A Dynamic Capabilities View. Management
International Review. 58(4). pp.541-570.
Moore, S., 2018. Sustainable Energy Transformations, Power and Politics: Morocco and the
Mediterranean. Routledge.
Aggarwal, V. S. and Kapoor, M., 2018. International Joint Ventures in the Framework of
Dunnings’ Oli Paradigm-A Study of Indian Corporates. Management Today. 8(1).
pp.49-52.
Nouaim, W., and et. al., 2019. Mapping the water erosion risk in the Lakhdar river basin (central
High Atlas, Morocco). Geology, Ecology, and Landscapes. 3(1). pp.22-28.
Antentas, J. M., 2016. Internationalist challenges: antiglobalisation, occupy, and
indignados. Globalizations. 13(4). pp.469-483.
Bel, R., 2018. A property rights theory of competitive advantage. Strategic Management
Journal. 39(6). pp.1678-1703.
Ipek, V., 2020. Conclusion to the King’s European Morocco. In North Africa, Colonialism and
the EU (pp. 105-118). Palgrave Pivot, Cham.
Wilson, N.H., 2017. Hard Brexit: Will there be consequences for UK dentistry?. Faculty Dental
Journal. 8(2). pp.60-64.
Online:
Foreign & Commonwealth Office and et. al. 2019. UK and Morocco sign continuity agreement.
[Online]. Available through: <https://www.gov.uk/government/news/uk-and-morocco-
sign-continuity-agreement>
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