Brexit, Trump and the (expected) electoral advancements of populist parties in Europe raise concern, because of their common attitude against trade liberalization and immigration which are known to be beneficial for all countries involved. This edition of Opinions reviews existing economic research to learn about the causes and consequences of this trend.

The studies reviewed suggest that (i) the negative impacts of trade liberalization and immigration on local labor markets, combined with the spread of the Internet as a means of political communication, were major forces behind the rise of populism, and that (ii) populist parties strong positions on trade and immigration are likely to be reflected on policies implemented, because other parties are likely to adopt closer platforms to improve their electoral prospects. To revert the current trend, economic research suggests adequate compensations to those who are expected to lose from trade liberalization (and similarly from immigration). This is particularly relevant for South Korea where assessments reveal the conflicting impacts of FTAs on different socioeconomic statuses. Studies showing the positive effect of the US Trade Adjustment Assistance program support the effectiveness of such measures.