Globalisation, Openness and Economic Nationalism: Conceptual Issues and Asian Practice

This paper considers the question of economic nationalism through the lens of economic openness. Complete economic openness, which connotes close or total integration of a country with that of the world economy, is the antonym of economic nationalism. The paper argues that economic openness is a multi-dimensional concept. A country can be open, or not so open to all or some of the following: trade, exports, imports, finance, science, culture and education, migration, foreign investment, investment by its citizens and companies abroad, among other things. There is no economic theory that suggests that a country has to be open in all dimensions simultaneously. Given its economic and geo-political situation, a country may choose to be open in some areas and not in others. The paper examines the analytical question: what is the optimum degree of openness for an economy? This theoretical framework is used to illustrate and explain the Asian experience, specifically of Japan and Korea. The implications for policy for these and other national economies as well as those for the global economy are outlined. The main policy message of the paper is that countries should seek, whenever they can, 'strategic' rather than close integration with the international economy. In that sense economic nationalism, notwithstanding globalization is still the order of the day in many Asian countries. They need to maintain national control over volatile capital movements and prudently regulate the financial sector in the national interest.