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The Economics of Nationalism

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  • Xiaohuan Lan

    (Cheung Kong GSB)

  • Ben Li

    (Boston College)

Abstract

This paper provides an economic framework for examining how economic openness affects nationalism. Within a country, a region's level of nationalism varies according to its economic interests in its domestic market relative to its foreign market. A region's nationalism is strongest if the optimal size of its domestic market equals the size of its country. All else being equal, increasing a region's foreign trade reduces its economic interests in its domestic market and thus weakens its nationalism. This prediction holds both cross-sectionally and over time, as evidenced by our empirical study using the Chinese Political Compass data and the World Value Surveys. Our framework also applies to analysis of nationalism across countries and receives support from cross-country data.

Suggested Citation

  • Xiaohuan Lan & Ben Li, 2014. "The Economics of Nationalism," Boston College Working Papers in Economics 856, Boston College Department of Economics.
    • Handle: RePEc:boc:bocoec:856
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    More about this item

    Keywords

    Nationalism; Economic Openness; Country Size; Gains from Trade; China;
    All these keywords.

    JEL classification:

    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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