Economic nationalism, also called economic patriotism and economic populism, is an ideology that favours state interventionism over other market mechanisms, with policies such as domestic control of the economy, labour, and capital formation, including if this requires the imposition of tariffs and other restrictions on the movement of labour, goods and capital. The core belief of economic nationalism is that the economy should serve nationalist goals.
Economic nationalists oppose globalization or at least question the benefits of unrestricted free trade, favouring protectionism. To economic nationalists, markets are to be subordinate to the state, and should serve the interests of the state (such as providing national security and accumulating military power). The doctrine of mercantilism is a prominent variant of economic nationalism. Economic nationalists tend to see international trade as zero-sum, where the goal is to derive relative gains (as opposed to mutual gains).
Economic nationalism tends to emphasize industrialization (and often aids industries with state support), due to beliefs that industry has positive spillover effects on the rest of the economy, enhances the self-sufficiency and political autonomy of the country, and is a crucial aspect in building military power.
Economic nationalism should be understood as a set of practices to create, bolster and protect national economies in the context of world markets. The rise and institutionalisation of economic nationalism in the 20th century was a product of economic crisis, nationalist movements and enlarged states.
Nature of Economic Nationalism:
(1) The integration and therefore interdependency of economies.
(2) The complexity of the global economy, making it all but impossible to separate by nationality;
(3) The greater extensity of world markets compared to the mid-20th century;
(4) The redundancy of the various models of economic nationalism.
Contemporary Cases in Economic Nationalism
As a policy is a deliberate system of principles to guide decisions and achieve rational outcomes, the following list of would-be examples of an economic nationalistic policy, where there is consistent and rational doctrine associated with each individual protectionist measure:
- Proposed takeover of Arcelor (Spain, France and Luxembourg) by Mittal Steel Company (India)
- French governmental listing of Danone (France) as a ‘strategic industry’ to pre-empt a potential takeover bid by PepsiCo (USA)
- Blocked takeover of Autostrade, an Italian toll-road operator by the Spanish company Abertis
- Proposed takeover of Endesa (Spain) by E.ON (Germany), and the counter-bid by Gas Natural (Spain)
- Proposed takeover of Suez (France) by Enel (Italy), and the counter-bid by Gaz de France (France).
- United States Congressional opposition to the takeover bid for Unocal (USA) by CNOOC (PR China), and the subsequent takeover by Chevron (USA).
- Political opposition in 2006 to sell port management businesses in six major U.S. seaports to Dubai Ports World based in the United Arab Emirates.
- Limits on foreign participation and ownership in Russia’s natural resource sectors and selected Russian industries, beginning in 2008.
Consumer preference for local goods gives local producers monopoly power, affording them the ability to lift prices to extract greater profits. Firms that produce locally produced goods can charge a premium for that good. Consumers who favour products by local producers may end up being exploited by profit-maximizing local producers. For example; a protectionist policy in America placed tariffs on foreign cars, giving local producers (Ford and GM market) market power that allowed them to raise the price of cars, which negatively affected American consumers who faced fewer choices and higher prices. Locally produced goods can attract a premium if consumers show a preference towards it, so firms have an incentive to pass foreign goods off as local goods if foreign goods have cheaper costs of production than local goods.