Neo-protectionism in international economic policy: alternatives dimensions of global interdependence

Володимир Панченко
Кандидат історичних наук
Почесний директор Інституту суспільних досліджень

У статті “Нео-протекціонізм у міжнародній економічній політиці: альтернативні аспекти глобальної взаємозалежності” стверджується, що нові форми стимулювання економічного зростання, запроваджені на рівні країн або впроваджені наддержавним регулюванням, мають значний вплив на зростання неопротекціонізму як нової галузі міжнародної економічної політики. У роботі подана спроба класифікувати неопротекціонізм, визначити його форми та окреслити конкретні інструменти його реалізації.

Measures to stimulate economic development incorporated in macroeconomic policies of developed and developing countries can be referred to as “neo-protectionism” in times of global economy recession. Contrary to “classical” protectionism aiming at protecting national producers or selected industries given their significance or political influence of their stakeholders, neo-protectionism has the toolkit that responds on new challenges of “new norm”. In its revised form the emphasis in goal-setting is changed: stimuli to economic activity in response to the shrinking total demand rather than protection of domestic businesses in a home country is emphasized [1]. Therefore, the goals associated with the assurance of economic sovereignty (for developing countries) or with sustaining the economic power (for developed countries) or with expansion of economic impact (for developing countries) have become the dominants in transformation of classical protectionism into neo-protectionism. The murky nature of this protection makes it hard to enumerate [2].

Because the disguised or half-open character of neo-protectionism goes beyond the classical forms of protectionism, fixed in WTO documents, further hybridization of its forms raises the need for their classification, to draw the scientific community’s attention to the new challenges for global regulation of the international economic relations system.

a) Institutional neo-protectionism

Institutional neo-protectionism is interpreted by us as a direction in the international economic policy, which implies government or supranational intervention, in order to create the institutional background encouraging efforts to preserve or expand economic impact and promoting alternative forms for cooperation and regulation of international economic relations, to stimulate economic growth or solve social problems. It constitutes a tool for state policy or interstate agreements in the political toolkit of both developed and developing countries.

b) Ideological neo-protectionism

Ideological neo-protectionism: the principle optimizing international economic relations for the benefit of its individual participants and unions. It is an instrument regulating international economic relations by setting up the areas of potential cooperation and building its institutional framework; it has pro-cyclic and anti-cyclic character, and intended to assure economic sovereignty and/or economic growth of countries or associations.

c) Integrative neo-protectionism

Integrative neo-protectionism: a form for implementing economic, political or security interests of countries, implying utilization of the integrative unions’ capacities through coordination of international economic policy. New coordination implies significant change in the internal policy of countries considering international interdependence [3], in order to maximize “common welfare” and to seek for ways to increase the national welfare of participating countries. It may refer to coordination of economic and political measures of various countries, with possible handing over of some authorities to national bodies.

d) Regulatory neo-protectionism

Regulatory neo-protectionism: an instrument modifying the rules for global coexistence, which established at the phase of global interdependence and reflected the interests of powerful players. It constitutes the principle coordinating economic policy at global, regional or national level; at the same time, it is a form of neo-dependence and a response on it. It enables for implementation of ideological and institutional neo-protectionism, to set up optimal conditions for business operation and stimulation of economic activity. It can be implemented in two forms: centralized (International Monetary Fund, World Bank, WTO, OECD etc.) [4] and decentralized [5].

e) Ecological neo-protectionism

Ecological neo-protectionism: a form of ideological and institutional neo-protectionism; it acts as an instrument regulating relations of structural and technological dependence.

f) Market-oriented neo-protectionism

Market-oriented neo-protectionism: a response on the acknowledged reality that freedom of trade can never occur without limiting factors originating from objective needs of national economies and growth capacities of the global economy. Accordingly, a function of market-oriented protectionism is in creating the mechanisms capable to eliminate the so called “market failures” and to have impact on market conjuncture.

g) Factor-based neo-protectionism

Factor-based neo-protectionism: an instrument regulating international economic relations, to eliminate mineral-based, resource-based, energy-based and technological dependence.

h) Infrastructural neo-protectionism

Infrastructural neo-protectionism: a form of government’s intervention, in order to reduce factor-based or structural dependence through setting up favorable investment climate and pushing up economic activity, to encourage infrastructural projects.

i) Monetary neo-protectionism

Monetary neo-protectionism: a form of eliminating the monetary component of neo-dependence in course of monetary and financial integration, given the preserved monetary sovereignty. It is an instrument regulating the dilemma of incompatible triad (by setting compromise between independent monetary policy, exchange rate control and openness of the capital account) and management of capital flows.

j) Currency-based neo-protectionism

Currency-based neo-protectionism; an instrument implementing economic and security interests of country by use of the rate fixing mechanism, in order to increase the competitiveness at internal and external market, and by use of the expansion capacity of a currency.

k) Financial neo-protectionism

Financial neo-protectionism: an instrument implementing economic or security interests of a country (including domestic companies); it refers to the capability to exercise anti-cyclic control over capital flows by use of administrative levers; its effectiveness is conditional on the quality of the country’s financial infrastructure and the degree of the country’s integration in the global financial area.

l) Debt-based neo-protectionism

Debt-based neo-protectionism: an instrument implementing economic or security interests of countries or companies; it implies raising of alternative sources of loans and capacities for refinancing of debt, and free access to private and official lending markets without a damage for the country’s credit rank (established by international credit rating agencies).

References

  1. Serap Durusoy, Edgardo Sica, and Zeynep Beyhan, “Economic Crisis and Protectionism Policies: The Case of the EU Countries,” International Journal of Humanities and Social Science, Vol. 5, No. 6 (1) (June 2015): 57–68.
  2. The collapse of global trade, murky protectionism, and the crisis: Recommendations for the G20, Richard Baldwin and Simon Evenett (eds). Retrieved from http://graduateinstitute.ch/files/live/sites/iheid/files/shared/iheid/31/Murky_Protectionism.pdf
  3. Hiau Looi Kee, Ileana Neagu Constantinescu, and Alessandro Nicita, “Is Protectionism on the Rise? Assessing National Trade Policies during the Crisis of 2008,” The Review of Economics and Statistics 95 (1) (2013): 342–346.
  4. Alan O Sykes, “Regulatory Protectionism and the Law of International Trade,” University of Chicago Law Review 66 (1) (Winter 1999): 1–46.
  5. K. William Watson and Sallie James, “Regulatory Protectionism A Hidden Threat to Free Trade,” Policy Analysis 723 (2013): 2–27.