Economic Nationalism: Renumerative or Ruinous

Nationalism is a word that can instigate both intense allegiances and accentuated hatred. The Britannica website describes it as the ideology based on the premise that the individual’s loyalty and devotion to the nation-state surpass other individual or group interests. Nationalism first emerged as a political concept in nineteenth-century Europe. It begot the unification of contemporary nation-states like Germany and Italy, catalyzed the disintegration of empires like Austria-Habsburg and USSR, and became the pivotal ideal for liberation movements in European colonies in Asia and Africa. The governments of nation-states built based on common cultures, languages, religions, or historical backgrounds have utilized nationalism as a powerful tool to mobilize citizens’ loyalties towards the country to manifest their domination in the world, politically, socially, and economically. 

Economic Nationalism is a strategy where the government of a country interferes in the economic processes, usually through the imposition of trade barriers, to revive the economy which, they believe, is enduring hardships in the liberalized global economy. The citizens, eager to prove their nationalism, readily follow the government’s economic policies which are capable of putting foreign relations and international agreements of the country in peril.

Economic nationalism has been a very instrumental mechanism used by nations desirous of winning the global currency war for centuries now. Throughout modern history, examples of economic nationalism have ranged from mild control over a single industry of the nation to entire frameworks for establishing supremacy over the world economy.  

As a colony of Britain, India also often boycotted British cloth and other goods as a form of protest against the oppressing colonizers. At the same time, Indian leaders popularised Khadi, an indigenous product, to make Indians self-sufficient and hurt the economy and trade of Britain to shake the very basis of their empire. Even after independence, the Indian economy was closed off from the outside world until 1991 to protect the local industries from the immense competition with foreign manufacturers. Similarly, the Boston Tea Party sought the loss of Britain. Britain had, in its process of colonizing America, left the thirteen colonies at its complete mercy for everything from tea to weaponry. The approach of both India and America was passive.

On the contrary, was the institution of Britain’s imperial empire. Britain had a more active strategy when it came to economic nationalism. Their goal was to become as powerful and rich as possible and thereby exploit weaker nations as a part of the empire. It imposed huge tariffs on imports from other imperial European nations, gained monopoly rights in the colonized nations, and used these colonies as markets for their industrial yield. Although Britain also limited foreign competition, its tactic differed from the earlier examples because, despite the trade barriers, they did not cease the expansion of markets for their domestic product.

The above examples demonstrate the two forms of economic nationalism. There is one form of passive economic nationalism exercised by India and American colonies that focuses on economic solitude and not on the expansion of domestic markets. This is referred to as protectionism.  The other form of active economic nationalism used by the British which concentrated on the consolidation of power and wealth is called mercantilism. Despite their differences, both of these arrangements have one thing in common: they both fall under the zero-sum game.

In the theories of international relations, a zero-sum game is a state where a change in policy by a nation for its benefit impedes the other nation and their benefits and losses nullify each other. In the context of economic nationalism, the country implementing such policies aims at benefitting their economy at the expense of another. This method is usually used by countries engaged in conflict. Presently, we see two major examples of economic nationalism in the world. 

As the United States of America prepares for its upcoming presidential elections, presidential candidate Donald Trump’s campaign primarily revolves around economic nationalism as he uses the slogan “Make America Great” to promise unparalleled political and economic strength of the States. His policies during his tenure as the President of the USA  attest to his firm belief in the ideology of economic nationalism.

Economic nationalism is quite common between India and China. The two Asian countries are the biggest developing economies and have based their bilateral relation to economic cooperation. However, tensions from the border disputes have often provoked both sides to attack each other’s economic growth. During the pandemic also, the Indian government imposed numerous trade barriers against China, banned Chinese applications, and urged Indian citizens to boycott Chinese products as military tensions intensified in the disputed areas. 

Although economic nationalism seems like a viable option to achieve economic development, experts fear that it may not be the best way to tackle problems and conflicts in a highly globalized world. The collaborative response by major economic powers during the economic crisis of 2008-2009 saved the world from a reprise of the Great Depression. Now as the pandemic poses a similar problem, the world needs a positive-sum game, i.e. political and economic cooperation, by countries to avoid falling into another economic abyss.