This study examines the process of national identity formation. It argues that national discourse are systems of meanings in which identities develop via difference. While modernist theories on nationalism have focused on similarity to establish categories of the 'same', in this study the focus is on the difference which constructs identities of the We in relation to Other. Since meanings of a collective self and Other develop in language, the study focuses on the political economy of meanings, and how meanings change over time and space, yielding a dynamic view of national identity.