MINI CASE: ECONOMIC NATIONALISM

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Buy American .... Buy Spanish!!!British Jobs for British workers. The ideology of economic nationalism seeks to implement trade policies that help to keep jobs and investment at home, while ignoring the advantages of open international trade and investment. Economic nationalism was popular during the Great Depression of 1929-33, when it served to protect domestic firms from international competition. However, this led to curtailing international business activity, making the global trade as a myopic policy, economic nationalism nevertheless re-emerged during the global financial crisis that originated in the United States in 2008, prompting many analysts to wonder whether the public has learned anything from the international business history.

Soon after the U.S. stock market crash of 1929, Willis Hawley and Reed Smoot, two Republicans in the U.S. Congress, sponsored a bill to raise import tariffs to the highest level in U.S History. Given the high rate if U.S. unemployment at that time, the bill was passed in order to keep jobs at home. This is resulted in retaliation from other nations as they raise tariffs on exports from the United Stated and other countries. The net result was a ruinous fall in global trade and a worldwide depression.

In late - 2008 and 2009, when the United States faced the worst recession since the Great Depression, the call for a new round of trade barriers was being debated. However this time the focus was upon inserting non-tariff barriers on item in the American Recovery and Reinvestment Act of 2009, which was meant to give the floundering U.S. economy boost. This legislation commonly known as the "stimulus package 'included a "Buy American" provision that restricted government spending to U.S. companies. As a result, public works such as infrastructure projects were required to use commodities such as iron and steel that wad domestically sourced, despite that these products cost more that imports from countries such as China. Similarly, the development and delivery of computerized medical records would be restricted to domestic IT firms, even if such services would be sourced at a much lower cost from India.

Some experts argued that such protectionism may plate international rules and U.S. exporters feared retaliation against their goods and services. Canada in fact, soon threatened retaliation. Meanwhile other countries moved in similar directions. The British workers', the French president urged French car companies to invest at home rather than elsewhere in the European Union, the government of Spain launched a "Bu Spanish "campaign. It may not be Smoot- Hawley but the global implications could be the same.

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QUESTIONS/ ANSWERS:

1. Is economic nationalism justified?
2. Is the Smoot-Hawley plan better or worse than "Buy American? "Buy Spanish? Or "British jobs for British workers? Explain fully.