The Resurgence of Economic Nationalism in the 21st Century
- Resurgence of Economic Nationalism – Countries are shifting towards protectionist policies like tariffs, subsidies, and trade restrictions to prioritize domestic industries and reduce foreign dependence.
- Key Global Policies – Strategies like “America First” (USA), “Atma Nirbhar Bharat” (India), and “Made in China” (China) emphasize self-reliance and national economic growth.
- Impact on Global Trade – Economic nationalism challenges globalization, leading to trade wars, geopolitical tensions, and a shift towards localized production and economic sovereignty.
Due to changing local and international objectives, economic nationalism has seen a resurrection in the twenty-first century. However, economic liberals frequently disparage programs that do not fit their worldview by using the phrase “economic nationalism” in a derogatory manner. It conceals more than it discloses, as is the case with every politically charged term. In practice, economic nationalism can take many different shapes, some of which are constructive and others of which are detrimental.
While extreme economic nationalism can be counterproductive, the same can be said of unchecked economic liberalism. When applied strategically, economic nationalism can serve legitimate domestic goals, such as strengthening national industries, reducing dependence on foreign markets, and reinforcing national identity. This approach does not necessarily entail harming other countries but rather prioritizing national economic interests within a global framework.
Understanding Economic Nationalism
The notion that the economy should primarily serve national interests is what defines economic nationalism, which is typified by state intervention in economic policies. This philosophy has its roots in realism, which holds that the state should work to maximize its gains because it is the main actor in international affairs. Economic nationalism encourages restrictive trade policies, government control over important industries, and steps to keep homegrown companies safe from overseas competition.
Economic nationalism peaked in the 19th century, but after World War II, economic liberalism gained prominence and eclipsed it. Countries adopted free trade, deregulation, and open markets more and more as globalization accelerated. However, there are drawbacks to economic liberalization as well, like heightened competitiveness, labor exploitation, and cultural uniformity. In order to safeguard domestic businesses and cultural legacy, many countries are currently reassessing their economic strategy.
The Global Shift Towards Economic Nationalism
Recent years have seen a resurgence of economic nationalism across the world. Several factors contribute to this trend, including economic instability, geopolitical tensions and growing dissatisfaction with globalization.
For instance, in 2014, Russia initiated a wave of nationalization in response to Western sanctions imposed following its annexation of Crimea. By reducing reliance on Western economies, Russia sought to strengthen its domestic industries and mitigate the economic impact of sanctions.
Similarly, the decline of traditional neo-imperialist powers, particularly the United States, alongside the rise of emerging economies like China, has intensified global economic competition. As economic power becomes more multipolar, the U.S. faces significant challenges in maintaining its hegemony. Economic nationalism has become a tool for countering these challenges and reinforcing national economic strength.
Economic Nationalism in the United States
Economic nationalism has gained renewed traction in the U.S., particularly in response to globalization and perceived threats to American industries. Former President Donald Trump embodied this shift with his “America First” policy. Upon taking office on January 20, 2017, Trump emphasized the need to prioritize American economic interests.
Since the end of World War II, and especially after the Cold War, the U.S. has played a central role in shaping global economic policies through military dominance and trade regulations. However, Trump sought to challenge this order by adopting a more protectionist approach. His policies included imposing tariffs on Chinese goods, renegotiating trade agreements, and pressuring NATO allies to contribute more to defense spending.
During his first term, Trump’s administration imposed significant trade restrictions, particularly on China, as part of an effort to reduce trade deficits and protect American manufacturing. If re-elected, he has vowed to escalate these measures, targeting imports from China, Mexico, and other countries while promoting domestic production.
Economic Nationalism in India
India has also embraced economic nationalism under Prime Minister Narendra Modi’s “Atma Nirbhar Bharat” (Self-Reliant India) initiative. This policy aims to promote Indian-made goods in the global market and reduce reliance on foreign products. While Modi has pursued liberal economic reforms, including privatizing state-owned enterprises such as Indian Airlines and parts of the energy sector, he has simultaneously provided subsidies to select industries to foster domestic growth.
For example, India has implemented protective measures such as tariffs, quotas, and anti-dumping duties to shield its industries from foreign competition. Under the “Make in India” initiative, the government has introduced reforms to encourage domestic manufacturing, particularly in the defense sector. Projects like the Kamov 31 helicopter development highlight India’s commitment to indigenous technological advancement.
Furthermore, India has attracted multinational corporations by offering incentives for investment. A notable example is Facebook’s decision to shift its office from Singapore to Gujarat, reflecting the country’s appeal as a business hub under Modi’s economic policies.
Economic Nationalism in China
China has long pursued economic nationalism through its “made in China” policy, introduced by Premier Li Keqiang. This initiative aims to enhance China’s technological production and innovation, reducing dependence on foreign technology. Unlike earlier industrial strategies that focused on replicating Western products, “Made in China” prioritizes advancements in artificial intelligence, information technology, aviation, and automotive engineering.
China’s economic strategy also involves strict state control over key industries and selective engagement with global markets. By investing heavily in research and development, China seeks to establish itself as a global leader in high-tech industries while maintaining a degree of economic self-sufficiency.
The Future of Economic Nationalism
As globalization faces increasing scrutiny, economic nationalism is likely to remain a dominant force in global politics. Countries are reassessing their monetary policies to balance liberalization with protectionist measures, ensuring that national interests are safeguarded.
While economic nationalism has drawbacks, including the risk of trade wars and diplomatic tensions, it also offers potential benefits when implemented strategically. By fostering domestic industries, reducing economic vulnerabilities, and maintaining cultural identity, nations can achieve sustainable economic growth without entirely disengaging from the global economy.
The resurgence of economic nationalism underscores the evolving nature of international economic relations. As countries navigate the complexities of globalization, economic policies will continue to reflect a blend of nationalist and liberal approaches, shaping the global economic landscape for years to come.
The author is a freelance writer, having a keen interest in global politics and in international relations.
