Not so far east? The impact of Central-Eastern European imports on the Brexit referendum

Abstract

ABSTRACT We explore the effect of the UK’s economic links with Central-Eastern Europe and China in the case of the Brexit referendum. First, we replicate and independently verify the Colantone and Stanig findings (2018a) on the effect of globalization on Brexit. Then, we extend their original analysis and demonstrate that although both Chinese and Central-Eastern European imports were significant causal determinants of the referendum’s outcome, exposure to Central-Eastern European imports was up to three times more important than exposure to Chinese imports. This may be due to cultural correlates of trade. Our analysis reveals that differences in media coverage between Central-Eastern European and Chinese economic news, as well as migrant population shares from these two regions, might have played a decisive role. Overall, the article also suggests that the import-shock method, as currently applied in the literature, is ill-suited to compare shocks with diverse origins.