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Economic Causes for the Rise of Populist and Nationalist Movements

Florian Dorn, David Gstrein, Florian Neumeier
CESifo, Munich, 2024

EconPol Forum 25 (2), 09-13
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  • Radical parties and populists benefit from deteriorating macroeconomic conditions. For voters, the overall economic development appears to be more important than their actual personal economic situation
  • The most important economic factors explaining the rise of populism as well as the loss of trust in political institutions are a widening income gap between people and between regions, exposure to economic shocks, high economic uncertainty, and worries about the future
  • Financial and economic crises, high exposure to global trade competition, an accelerating structural transformation, and immigration are discussed as key factors for increasing economic uncertainty
  • Populists benefit from misperceptions about immigration and from perceptions of increasing economic risks, even if they differ from objective developments
  • To combat the rise in populism, democracies need to increase resilience. That requires well-designed welfare and education systems that shield citizens from the consequences of economic crises and ensure equal opportunities; sound and sustainable fiscal policy to be able to react to economic crises; and targeted economic policies and instruments to limit economic uncertainty during crises and to support regions and people that feel left behind

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