20171211-NATIXIS-_Economic_nationalism__is_back__In_what_forms__Why__9页_583kb

Flash Economics Summary

Core Content

The document discusses the resurgence of economic nationalism and explores the various forms it has taken in recent years, as well as the underlying reasons for its return. It also highlights the potential risks associated with these nationalist policies.

Main Forms of Economic Nationalism

1. Protectionism

   • Demand for local production and content.
   • National preference policies, such as the "Buy European Act" inspired by the "Buy American Act."
   • Introduction of customs duties, such as the Trump administration's proposal to tax imports at 20%.
   • These measures contribute to the slowdown in global trade and the de-globalization of trade.

2. Protection against foreign investment

   • Governments seek to shield strategic companies from foreign acquisition.
   • This leads to a slowdown in foreign direct investment (Chart 2).

3. Rejection of federalism

   • Opposition to a common euro-zone budget and income transfers between countries.
   • Examples include movements in Catalonia, Northern Italy, and Flanders.

4. Return of capital controls

   • Implemented in countries like China to manage economic variability caused by large capital flows.
   • Emerging economies are particularly affected by these controls (Chart 4).

5. Use of exchange rates

   • Currency depreciation is used to stimulate the economy.
   • Examples include the euro zone in 2014, Japan in 2013, and the UK in 2016 (Charts 5A and 5B).

6. Absence of international economic policy coordination

   • Lack of coordination in currency, tax, and wage policies.
   • Examples include tax competition in the euro zone and wage reductions to gain market share (Chart 7).

Key Reasons for the Return of Economic Nationalism

• Slowed global growth (Chart 8): The "global pie" is no longer expanding, especially in industry, increasing competition for market share.
• Need to preserve industry: Industry supports skilled jobs and balanced foreign trade.
• Importance of corporate ownership: The nationality of shareholders influences investment and research location.
• Income inequality within large economic blocs: This has fueled dissatisfaction and a push for more national control (Chart 11).

Regional Income Inequality Examples

• Spain: Per capita GDP varies significantly between regions (Table 2).
• France: Regional disparities in per capita GDP (Table 3).
• Germany: Differences in per capita GDP across regions (Table 4).
• Italy: Regional income inequality (Table 5).

Conclusion: A Major Risk

• The return of nationalist economic policies is extremely dangerous.
• Protectionism undermines gains from productive specialization.
• Capital controls and protection against foreign investment hinder cross-border financing and investment.
• Rejection of federalism increases income inequality between countries and regions.
• Lack of policy coordination leads to inefficiencies, such as currency wars, tax reductions, and wage cuts.

Disclaimer

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