Nationalism in the age of globalization

The author is an associate professor and dean of the College of Business and Economics of De La Salle University.

Globalization is perhaps the most important of the long-run forces
driving world development today. (In the 20th century it may have been
the independence movements of the colonized peoples in Asia and Africa
– which, by the way, is an indication of how advanced politically the
Philippines was in the second half of the 19th century, when Filipinos
began their agitation for national sovereignty ahead of most other
countries in the region). Defined as the set of interrelated processes
that are effecting the increasing interdependence of markets,
industries and economies, globalization is rapidly changing the world
economic order as countries, responding to its inexorable drumbeat, vie
more and more intensely for new markets and technologies, physical and
financial capital, and skilled manpower and other scarce inputs, at the
same time that they struggle to shed off “excess fat,” such as
elaborate welfare systems and subsidy schemes, from their economies.

In his essay entitled “Between Nationalism and Globalization” (in The
State and the Market: Essays on a Socially Oriented Philippine Economy,
Filomeno Sta. Ana III, ed., Quezon City: Ateneo de Manila University
Press for Action for Economic Reforms, 1998), Emmanuel de Dios (a
member of the Yellow Paper Group) of the UP School of Economics ponders
the intriguing question: Is nationalism still relevant in a globalizing
world? After all, as he himself points out, there is a Latin proverb
that goes, “Ubi panis, ibi patria” (Where there is bread, there is my
country).

De Dios’s argument as I would articulate it, interspersed with my own
ideas, is as follows: In stark contrast to the naive view that
globalization would lead to a more uniform distribution of capital and
technology throughout the world (since these would flow out of
developed countries where they are abundant and therefore have low
rates of return and would move into developing countries where they are
scarce and therefore command high rates of return), the reality has
been that globalization has had a rather uneven impact both
geographically and on the mobility of production factors. Countries
have not all benefited from it to the same extent, the polar examples
being China and countries in Sub-Saharan Africa. And production factors
have not become more mobile to the same extent: Whereas financial
capital can now be moved at the speed of telecommunication signals,
agricultural inputs continue to move at the speed of air, sea and road
traffic.

Thus, a more sophisticated view of the impact of globalization is that
factors that are the most geographically mobile, the most adaptable and
the most globally scarce stand to benefit the most from globalization.
This is because these factors are the ones that can best exploit the
opportunities of the larger (world) market opened up by globalization.
In contrast, factors that are immobile and inflexible are bound to see
their market shares shrink as a result of increased competition.

For the Philippines, the soundness of this revised view is being borne
out by both the gaining and losing sectors. For instance, the sprouting
in the country of certain high-technology industries, such as hard disk
drives and computer chips, has created a higher demand for educated and
skilled labor, such as engineers and managers. Unskilled workers in
low-technology industries, however, have been rendered uncompetitive at
their current wage rates.

Against the onslaught of globalization, a country’s government
therefore has the urgent mission to create the conditions that would
attract the world’s mobile factors of production and allow them to
couple with the country’s immobile factors. Failing to do so not only
risks losing investment opportunities, it may also result in the
country’s mobile factors deciding to move out. A case in point: The
political crisis that followed the assassination of Ninoy Aquino led to
a massive flight of capital owned not only by foreigners but by
Filipinos as well.

Since the same charge is required of all governments, however,
globalization is likely to impose a form of economic homogenization on
all countries, since capital and other mobile factors do require
broadly comparable conditions. In other words, long-term economic
growth prospects, macroeconomic stability, tax rates, the provision of
public goods (such as public works infrastructure, public safety and
security, a fair and efficient criminal justice system, a good public
education system) – all of these cannot be too far out of line from
international norms, lest either capital and technology locate
elsewhere or the mobile factors desert the country.

To the extent, however, that a country can be better in certain
criteria and not lag too far behind the international norms in others,
it stands to attract more than its fair share of the mobile factors.
What this means is that the real basis of the competition among
countries is in the value of their immobile factors, i.e., in the
quality of their social and political institutions and the lure and
hospitality of their local cultures.

What of nationalism? From an economic standpoint, nationalism may be
seen as an express preference for and commitment to a country by its
citizens. As such, it acts as a breakwater against the lapping waves of
globalization. For owners of globally scarce and mobile production
factors, in particular, nationalism can be seen as an imperative to
cast their lot with the country’s immobile factors, especially with
those that have been made redundant by globalization. Because by doing
so, they raise the value of the immobile factors and enhance the
country’s viability.

But this is where I wish to extend de Dios’s argument. For those of us
who have the opportunity to emigrate, remaining in the country has,
lately, increasingly acquired the odor of heroic tragedy (in the sense
of a protagonist being arrayed against a vastly superior force). Hasn’t
staying put become nothing more than a defiant but ultimately futile
stance, evocative of Candida’s cry in Nick Joaquin’s A Portrait of the
Artist as Filipino, “Contra mundum!”?

After all, a commitment to remain in this country is not a sharp
instrument of policy intervention (that has been internalized by
citizens who have a choice). Indeed, such a decision to stay is a
double-edged blade that cuts both ways. It means casting one’s lot with
the country’s poor, downtrodden and unemployed, on the one hand, but
also with its crime, graft and corruption, inefficiency, lack of
political will, etc., on the other.

Thus, it is not enough to say that nationalism means staying put and
making one’s life in this country. It is not enough to say that
nationalism means using one’s talents in this country, abiding by its
laws, and paying its taxes (because these actions generate positive
externalities for the poor). In addition, nationalism requires that one
rage against the social ills, that one not countenance graft and
corruption in any form. Nationalism in the era of globalization
requires that citizens set things right and create a hospitable
environment for the mobile factors of the world. Nationalism, in other
words, is an essential weapon in a country’s fight to gain the
competitive edge by strengthening the quality of its social and
political institutions.

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