Against economic patriotism
- Presentation of PPR and Puma
- Presentation of the operation
- Decision and Executive Summary
The debate which began in France about economic patriotism is fairly indicative of the absence of a precise definition of the concept. The expression of 'economic patriotism' appeared for the first time in 2003, in The Journal Intelligence. It means a specific behavior to consumers, businesses or public authorities, of favoring the good or service produced within a nation or group of nations.
According to Christian Harbulot, economic patriotism defines the framework for development of a country, facing the opportunities and threats arising from globalization of trade. It would thus further the public interest. Economic patriotism is based on the concept of economic self-defense and is manifested today by financial protectionism which is to protect a company considered 'strategic' for the economy of a country, against foreign multinationals.
There is much controversy today about this and many issues arise when the consequences of such a policy in a globalized world increases. How far can we go to defend its business without being called a protectionist? Should we give free reign to the market without intervention?
We see first that economic patriotism is a threat to the liberal system and therefore protectionism leads to an inconsistency in political discourse.
Efforts under the economic patriotism have limited results and may even be against-productive, by penalizing the international image of France as an open economy and crippling the internationalization of groups that the government intends to protect.
Economic patriotism slows the process of internationalization of firms, and therefore profit maximization. The internationalization of firms is a process that results from three business objectives: The strategy of conquest of new markets by larger groups, especially in countries where growth is fastest; the desire to reduce costs by exploiting the advantages of each zone; and the search for economies of scale, which explains the continuing concentration of firms, both in product development for their manufacture and marketing.
Direct investment (FDI) of multinational corporations (MNCs) is the means used by firms to achieve its objectives. They can take different forms: mergers and acquisitions, relocations.
When a State promotes economic patriotism, it goes against the free movement of capital in the world: for example, anti-takeover measures (operations takeover) taken by the French Government intended to limit the share capital of French companies that foreign shareholders are allowed to acquire.
The economic effects of takeovers are quite clear: a bid based on the belief that the target company is valued at the maximum, a change of management would increase the value creation and shareholder wealth.
Tags: economy; patriotism; economic patriotism; pros and cons of economic patriotism