Nationalism, and its effects on global economics

Nationalism is defined as the belief that patriotism for your own country is of more value than other countries, and that your country should come before others. Nationalistic countries believe that their own politics and economic growth should be focus of their country, and not likewise for others. This rival’s globalism as it focuses away from helping more countries abroad than your own.

The current rise of nationalism such as Brexit, Trump’s America and Russia are a concern for global economics, as powerful countries are turning their attention from how to better global trade to how to better themselves. These countries invite trade protectionism, which attempts to limit imports and exports of both natural resources and goods, as a way to have only locally made goods available for the nations’ market. Trade protectionism is good for local companies as it limits their competition to only local ones, meaning less competitors in the market, this can create local jobs, furthering along nationalistic goals. However, this lack of competition means that companies do not need to work as hard to produce high quality products, meaning that low quality ones will suffice as competition is scare, leading to lower consumer confidence. Supply for local made goods would rise as alternative products are scarce in the market, resources would also be reallocated, where before they might have been exported and now they will be used locally.

Global economics have always favoured trade details between nations, where one country can export their goods to another country, and receive something else in return. As nationalism moves away from this possibly in favour of bilateral trade deals, other countries need to fill in the blank where that country is not involved, possibly leading to a trade deal with poor results. Trade between nations is believed to strengthen ties to other countries, and create a world without borders for trade, this is what globalism focuses on, that the global market is stronger than individual nation markets. Comparative advantage is a major driving force between trades with other countries, where one country is better at producing one item but lacks in the other, trade can help a country receive more of the product it lacks in production, and export the item it is good at making. Overall global trade seems a better option in the long run, but political swaying impacts the global trade deals, meaning it is harder to fully implement.

While global economics will be hit by the rise of nationalistic governments, local economies could expect to flourish under laws and regulations favouring them over international competition. Stronger local businesses will be preferred to foreign businesses and demand for local made products will increase. Nationalist economic policies can be characterised by corporate tax cuts, domestic deregulations, increased import tariffs and higher defence spending, all to benefit the local businesses and population. However, businesses who depend on foreign workers for a cheaper workforce will be impacted as nationalistic policies would have businesses only hire local workers, potentially costing the business more to hire local workers. Multinational companies may also be impacted as they would be required to produce all their goods in that country, which could cost more than to produce and import from other countries. All of this is economically beneficial and not so, where one policy benefits one party, it affects another, the government could do more to help everyone. Whether it will instead focus on which better supports the country is completely up to that leading party.

In conclusion, where nationalism may be an effective policy to run a country politically and economically natively, it no doubt worsens global trade and the goals of globalism. Whether you agree or not with nationalism as a way of government policy, it is the enemy of global trade, which quite often is beneficial to all parties involve.

Adam Steinke

Image credit: http://www.economist.com/news/international/21710276-all-around-world-nationalists-are-gaining-ground-why-league-nationalists

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10 Comments

  1. Improve global trade is necessary for each country it can increase the material and non-material living standard. Also the country can export their product to the other country and import which product they not to produce. Both of import or export can excess more competitors and create more job to people added to the wellbeing and economic prosperity. However most of country also want to increase export and reduce import try to make sure their local business are not disappointed.

    Liked by 3 people

    1. I agree with your point in that many countries are not equipped with the resources to produce goods and services that the people of their nation demand. This leads to more expensive goods and services and many countries having to do without certain items that were once imported to them. Global trade is indeed needed to uphold material and non-material living standards in an economy.

      Liked by 1 person

  2. Couldn’t agree more. The rise of Nationalism and Protectionist economic policies present great danger to global trade and economic growth. The overall market will suffer as prices for the consumer rise to pay for new tariffs on imports and labour costs for manufactured goods made in less competitive first world countries, leading to a contraction in aggregate demand as consumers quite simply cannot afford to buy as many products at increased prices. This will far outstrip any economic benefits experienced by consumers in protectionist countries, as wages will never rise enough, even with the expand in manufacturing, to offset these new costs.

    Liked by 1 person

    1. As an economist I agree with both of you. However, what about the negative externalities created by continually increasing globalisation and production? These could include the loss of unique and individual cultures as international trade leads to a generic culture, the rising power of multinational companies at the expense of local producers, and the ever-increasing need for resources destroys our environment. Is it worth it?

      Liked by 1 person

      1. Those are some great arguments against globalization which I had never really thought about before. However, in terms of limited resources, wouldn’t globalization be the better option? If one country can produce a product more efficiently than another, then they will use less resources to get the same result as producing it for themselves. Am I right with this statement, or am I missing something?

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  3. I can’t really see how the current economic system of globalisation will benefit anyone except developed countries – while third-world countries are currently benefiting from the jobs provided by globalisation (producing clothes, electronics, etc), the benefits are not high enough to ever allow the third-world countries to reach a stable level of growth.

    For example, Bangladesh is currently experiencing one of the largest growths in GDP in the world, increasing by 7.05% from 2015 -> 2016. Whilst this is relatively high, it would still take them 58 years to reach the GDP per capita that the US enjoys right now – and 83 years to eclipse them. And this is assuming that America keeps a relatively low rate of growth (1.9% annually) and Bangladesh maintains it’s exceptionally high rate. The other factor is that Bangladesh is a much smaller country geographically – it is essentially impossible for them to ever reach America’s level of prosperity under the current system. And this is not taking into account changes in technology – how long until Bangladesh’s low-skill labour force are replaced by machinery? They will ultimately only be hurt by globalisation.

    Liked by 2 people

    1. I don’t really see what you are getting at here. Globalisation includes a vast sum of benefits and costs and you only really touch on one of them here- economic growth. Globalisation also includes freedom of ideas, technology and speech. Without globalisation, would every second Vietnamese have access to a cell phone? Would the people of China enjoy western movies or the Internet? Would India be the largest democracy in the world? It is also important to consider that globalisation is almost inevitable, with the full forces of human nature and powerful corparations behind it. When discussing globalisation, it is important to consider all the aspects.

      Liked by 2 people

  4. Nationalism is an important part of any society. It helps form the national identity and brings the citizens of a country together. Perhaps what we need in this world a bit more nationalism to bind the split countries in the Middle East and Africa together, and halt their years of civil war. The people who give nationalism a bad name will tend to be poor citizens anyway, it’s not the nationalism that makes them bad people. Perhaps we can look behind the facade and see what the real issues are.

    Liked by 1 person

    1. A good point Geoffrey. The only caveat I can see is that often nationalistic pride can lead to intolerance for people who are outsiders. I believe that this is one of the main causes of feuding groups/tribes in the Middle East and Africa. How can we encourage a national identity while still being accepting of other cultures?

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