Economic nationalism means significantly more than domestic consumers favoring domestically produced goods, or governments choosing to impose tariffs or quotas on imports and to implement restrictions concerning the employment of foreign workers. As in any decision of whatever nature, the choice of pursuing a nationalistic economic policy is a matter of trade-offs. On one hand, a government that opts to limit the entry of foreign products and factors of production into its borders ensures that local businesses prosper but risks potentially slower expansion. On the other, a government that promotes free trade and unrestricted entry encourages innovation and contributes to the welfare of consumers (who presumably constitute the majority of the population), yet gambles its popularity with domestic producers which, in societies where money is power, may yield devastating consequences.
It would not be just to say that encouraging the citizenry to shun foreign goods in favor of locally produced substitutes is ignoble. However, under ideal circumstances, it can be argued that such action, while honorably motivated, would be ignorant or irrational. The same can be said for protectionist policies, except in cases where politicians have some stake in the profitability of local firms which results in a conflict of interest on the politicians’ part in that their priority must be to look after the needs of consumers.
Effective nationalistic economic policy combines the nationalistic motive – ensuring that everyone obtains maximum benefit and no one gets left behind – with the economic efficiency aspect. It is up to governments to find and enact the appropriate measures that will best promote long-term development.
NSTP @ UP School of Economics 