How does economic nationalism influence crisis response?

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Economic Nationalism: A Lifeline in Crisis or Fueling the Fire?

Imagine your neighborhood is on fire. The best approach would be for everyone to connect hoses, guide fire trucks, and evacuate neighbors, right?

But what if, at that moment, one household says, "No, my bucket of water is for my own use first; I can't care about others," and even locks the fire hydrant in the hallway for their exclusive use? What would be the outcome? It's highly likely their home might be saved temporarily, but the fire would spread, potentially engulfing the entire neighborhood, and ultimately, their own home could be affected by the larger blaze.

This somewhat extreme example can help you better understand the role economic nationalism plays during a crisis.

Simply put, economic nationalism is a form of "economic patriotism" that advocates "our nation first." It believes that in economic activities, a nation's own interests should be prioritized, even if it harms other countries' interests. Specific practices typically include:

Trade Protectionism: Raising tariffs, restricting imports, protecting domestic industries.
Investment Barriers: Restricting foreign capital from entering domestic markets.
Resource Control: Prohibiting the export of critical materials (e.g., food, medicine, energy).

Even in normal times, these practices are highly controversial. However, once a global crisis (such as the 2008 financial tsunami or the recent COVID-19 pandemic) strikes, their negative impacts are dramatically amplified.

How Does Economic Nationalism Affect Crisis Response?

1. Going It Alone, Hindering Global Cooperation

Modern crises, especially financial and public health crises, are global in nature; viruses and financial risks do not recognize national borders. Solving these problems requires concerted efforts from all nations.

During a Financial Crisis: Central banks worldwide need to collectively lower interest rates or provide liquidity to stabilize global market confidence. If each country only looks out for itself, adopting "beggar-thy-neighbor" monetary policies (e.g., frantically printing money to devalue their currency for export advantage), the result is a "currency war" that further destabilizes the global financial system.
During a Pandemic Crisis: The most typical example is "vaccine nationalism." Some countries, holding large quantities of vaccines, prioritize domestic demand and even hoard excess doses, leaving other nations struggling to obtain even a single dose. This is not only inhumane but also allows the virus to continue spreading and mutating globally, ultimately ensuring no one can escape unscathed.

2. Tearing Apart Global Supply Chains, Exacerbating Material Shortages

Our lives today are deeply reliant on global division of labor. The phone in your hand might contain parts from over a dozen countries. During a crisis, we particularly need a stable supply of medical supplies, food, and energy.

When economic nationalism takes hold, countries begin to hoard their resources.

Country A, a major mask producer, immediately announces an export ban during a crisis to prioritize domestic needs.
Country B, a producer of core ventilator components, also announces an export ban.
Country C, a major food exporter, also suspends exports to ensure its own food security.

The result is soaring prices for masks, ventilators, and food globally, with countries in dire need unable to procure these essential supplies. Such "supply chain disruptions" make the crisis itself more deadly, leading to more humanitarian disasters.

3. Capital Controls, Worsening Financial Crises

During a financial crisis, capital is like water; it needs to flow to the "thirstiest" places to prevent systemic collapse.

However, with the rise of economic nationalism, countries fear capital outflow and begin to tighten capital controls, preventing money from "escaping." This is akin to cutting off the fire hose leading to a burning building. Banks or countries in urgent need of funds cannot get assistance and are likely to collapse, triggering a chain reaction that turns a small crisis into a major depression.

4. Short-Term "Self-Preservation" That Backfires in the Long Run

Adopting protectionist measures might indeed protect some domestic industries and jobs in the short term. But this comes at a cost.

Increased Costs: Restricting imports means domestic consumers and businesses must purchase more expensive local goods, leading to inflation.
Retaliation: If you erect trade barriers against others, they will erect barriers against you. Your export industries will suffer significant damage as a result.
Loss of Efficiency: Globalization allows countries to do what they do best, thereby increasing overall efficiency. Closing oneself off and trying to do everything domestically leads to high costs and low efficiency, ultimately weakening a nation's competitiveness in the long run.

Conclusion

In summary, economic nationalism, when confronting global crises, acts more like a "negative-sum game." It transforms the international community from a "community with a shared future" where cooperation leads to win-win outcomes, into an "arena" of mutual suspicion and harm.

While the slogan "our nation first" sounds appealing, in a deeply interconnected world, no country can remain unscathed during a global crisis. Closing one's doors might block out temporary storms, but it also cuts off sunshine and aid. Both history and current events tell us that when facing common crises, cooperation is the least costly and most effective path forward.