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Does Economic Inequality Matter for Nationalism?

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The State of China’s State Capitalism

Abstract

This chapter answers two research questions. First, what is the multi-country empirical evidence on the relationship between citizens’ feelings of patriotism toward their country, controlling for other determinants of nationalism? Second, to what extent is the empirical finding applicable to the case of China? We first review existing theories on the relationship between economic inequality and nationalism. We then estimate the partial effect of a country’s economic inequality on nationalistic sentiments among its citizens using a 20-country dataset from 1990 to 2014 to assess the validity of those theories. Finally, we examine recent developments in China’s income inequality and the degree of Chinese people’s national sentiments to assess the applicability of existing theories in the case of China. On balance we find that either the Chinese government has not attempted to promote nationalism, or its attempt has not been effective in promoting nationalism to overpower the negative effect of income inequality on nationalism.

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Notes

  1. 1.

    Although there are subtle differences between nationalism and patriotism, they tend to be used interchangeably (Primoratz 2015). Apart from being a sense of pride in the nation’s achievements, nationalism is a multidimensional concept that can reflect citizens’ sense of national identity in many respects. Politically, it expresses the willingness of people to maintain self-governance or full sovereignty over their homeland, protecting it from alien invasions. Furthermore, it is oriented towards shared characteristics in a nation such as language, culture, religion, race, and a belief in a common ancestry, which can distinguish or differentiate the nation from other ethnic groups (Triandafyllidou 1998). Consequently, this national sentiment can penetrate into every aspect of social life and could be an important factor influencing the destiny of a country.

  2. 2.

    The Arab Spring refers to the democratic uprisings that arose independently and spread across the Arab world in 2011. The movement originated in Tunisia in December 2010 and quickly took hold in Egypt, Libya, Syria, Yemen, Bahrain, Saudi Arabia, and Jordan. The Arab Spring is generally attributed to dissatisfaction, particularly of youth and unions, with the rule of local governments and the wide gaps in income levels. The Occupy Wall Street (OWS) movement in 2011was a protest movement that began on September 17, 2011. The main issues raised by the movement were social and economic inequality, greed, and the perceived undue influence of corporations on government—particularly from the financial services sector. The OWS slogan, “We are the 99%”, refers to income inequality and wealth distribution in the United States between the wealthiest 1% and the rest of the population.

  3. 3.

    For example, see Meltzer and Richard (1981).

  4. 4.

    The LIS data are derived from micro-economic data of national household income, which are carefully harmonized and standardized prior to being applied to computing income inequality statistics based on a uniform set of assumptions and definitions.

  5. 5.

    The LIS database has earned a good reputation as the best data available for cross-national comparisons of income inequality (Smeeding 2005). Unfortunately, they are at present available for only about 50 high- and middle-income countries over 30 years. Another influential project that compiles cross-national data sets on income inequality over the past few decades is the data set assembled by Deininger and Squire (1996) for the World Bank. They combined many earlier data sets, distributing unevenly for 138 countries and over the period from 1890 to 1996. However, as Deininger and Squire themselves pointed out after evaluating the quality of their observations, these data are rarely comparable across countries or within a single country over time due to differences in income definitions (gross or net) and reference units (households or persons) of the underlying data.

  6. 6.

    If this assumption is violated, then regression estimators will be biased and inconsistent. For example, if these countries are all from developed economies in the world or they share the same geographical location, then their economic performance and cultural features may be similar to and dependent on each other, then the estimators of our regression will be biased and inconsistent.

  7. 7.

    The table of Stata results for the respective relationship between six nationalism indicators and income inequality is included in Appendix.

  8. 8.

    As Stock and Watson (2012) illustrated, if the omitted variable is correlated with the included regressors that partly determine the dependent variable, then the Ordinary Least Squares (OLS) estimator will be biased due to the violation of the first least squares assumption, which requires that the conditional distribution of error term given included regressors has a mean of zero.

  9. 9.

    The units of both dependent and independent variables are percentage, as reported in the previous text.

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Author information

Authors and Affiliations

  1. International Business School Suzhou, Xi’an Jiaotong-Liverpool University, Suzhou, China

    Rui Qian & Juann H. Hung

Authors
  1. Rui Qian
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  2. Juann H. Hung
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Corresponding author

Correspondence to Juann H. Hung .

Editor information

Editors and Affiliations

  1. Xi’an Jiaotong-Liverpool University, Suzhou, Jiangsu, China

    Juann H. Hung

  2. Xi’an Jiaotong-Liverpool University, Suzhou, Jiangsu, China

    Yang Chen

Appendix

Appendix

Report of STATA Results, Six Nationalism Indicators and Economic Inequality across 20 Countries (areas) over 5 Waves from 1990 to 2014, OLS Estimates

Dependent Variable

happy

mocatr

profna

fightfc

inpolitics

coinarmf

Regressor

(1)

(2)

(3)

(4)

(5)

(6)

Inequality

−0.389

−0.204

0.653

0.547

0.326

1.074**

(0.328)

(0.346)

(0.539)

(0.357)

(0.267)

(0.429)

Log (GDP per capita)

−5.774**

−1.889

−21.069**

−9.468**

−7.633*

−19.612***

(2.671)

(5.811)

(8.278)

(4.503)

(4.001)

(6.094)

Log (CPI)

0.339

−0.724

2.588***

1.155

0.185

−1.366

(0.443)

(1.163)

(0.542)

(0.919)

(0.515)

(1.101)

Foreign trade/GDP

19.956***

−4.195

15.090

−6.705

4.525

4.882

(3.918)

(9.300)

(9.856)

(6.873)

(6.006)

(8.481)

Public expenditure/GDP

−18.116*

12.015

−19.929

−30.581**

−5.976

49.946**

(10.203)

(15.500)

(11.921)

(12.987)

(6.122)

(18.563)

Unemployment rate

0.040

−0.479*

−0.668*

−0.017

−0.200

−0.613

(0.301)

(0.253)

(0.373)

(0.222)

(0.140)

(0.473)

Constant

90.283***

59.413

211.945***

135.199***

69.209**

194.886***

(21.953)

(45.533)

(54.951)

(30.759)

(25.696)

(45.191)

Entity fixed effects?

Yes

Yes

Yes

Yes

Yes

Yes

Clustered standard errors?

Yes

Yes

Yes

Yes

Yes

Yes

Adjusted R2

0.0803

0.1606

0.0587

0.2059

0.0000

0.0075

Observations

72

71

70

70

70

71

  1. Notes: ***Significant at the 1% level; **Significant at the 5% level; *Significant at the 10% level. Robust standard errors are in parentheses, clustered at country level
  2. Sources: World Values Survey, Standardized World Income Inequality Database and Economic Intelligence Unit

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Qian, R., Hung, J.H. (2018). Does Economic Inequality Matter for Nationalism?. In: Hung, J., Chen, Y. (eds) The State of China’s State Capitalism. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-13-0983-0_8

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  • DOI: https://doi.org/10.1007/978-981-13-0983-0_8

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