The Surge of Economic Nationalism in Western Europe

Abstract

We document the surge of economic nationalist and radical-right parties in western Europe between the early 1990s and 2016. We discuss how economic shocks contribute to explaining this political shift, looking in turn at theory and evidence on the political effects of globalization, technological change, the financial and sovereign debt crises of 2008–2009 and 2011–2013, and immigration. The main message that emerges is that failures in addressing the distributional consequences of economic shocks are a key factor behind the success of nationalist and radical-right parties. We discuss how the economic explanations compete with and complement the “cultural backlash” view. We reflect on possible future political developments, which depend on the evolving intensities of economic shocks, on the strength and persistence of adjustment costs, and on changes on the supply side of politics.

The Backlash Against Globalization

“…An influential narrative holds that the globalization backlash is rooted in the mass public, where a growing share of losers of globalization increasingly lashes out against globalization in its different guises (e.g., Colantone & Stanig 2019, Hobolt 2016, Norris & Inglehart 2019, Rodrik 2018. The most prominent and consequential examples of this popular backlash are the election successes of nationalist candidates, such as Donald Trump in the United States and Jair Bolsonaro in Brazil, and the Brexit referendum vote.…”

“…Other socioeconomic transformations are equally-or perhaps even more-consequential in fostering backlash. For example, several studies find that support for radical right parties and nationalist projects such as Brexit is driven by exposure to automation and the digital revolution (Colantone & Stanig 2019, Frey et al 2018, Im et al 2019). In fact, the IMF ( 2019) concludes in a recent study that the effects of technology on local labor markets are much more pervasive and long-lasting than trade shocks.…”

Nationalist ideology, rightwing populism, and public views about climate change in Europe

“…Furthermore, nationalism also tends to involve economic protectionism (Halikiopoulou et al 2012). For instance, nationalists often view migration as an economic threat resulting in an increasing strain on national public finances (Colantone and Stanig 2019).…”

The Rise of Populism and the Revenge of the Places That Don’t Matter

“…The economic argument emphasises that changes linked to globalisation have rendered increasing numbers of individuals economically vulnerable. Openness to trade -especially the 'China-shock' [4,5,10,11] -together with the expansion of artificial intelligence have rendered many traditional skills obsolete, thrusting those relying on limited formal skills into economic insecurity [31]. The austerity measures adopted after the outbreak of the crisis have also been a factor that has contributed to the loss of opportunities [6,28,47] and social status by vulnerable individuals [25].…”