Autarky

Definition

Autarky is an economic system where a nation or region aims for self-sufficiency and minimizes reliance on foreign trade. In the context of the Great Depression, many countries turned to autarky as a response to the global economic crisis, seeking to stabilize their economies by producing everything they needed domestically.

5 Must Know Facts For Your Next Test

1. During the Great Depression, countries like Germany and Italy adopted autarky to reduce dependence on imports and protect their economies from global market fluctuations.
2. Autarky often involved government intervention in the economy, such as the establishment of state-run industries and the implementation of policies to boost domestic production.
3. The focus on autarky led to significant changes in trade policies, as nations implemented tariffs and quotas to limit foreign competition.
4. While autarky aimed to create economic stability, it often resulted in inefficiencies and a lack of innovation due to reduced competition.
5. The failure of autarky in various nations contributed to the eventual shift towards more open trade policies after World War II, as countries recognized the limitations of isolationist approaches.

Review Questions

• How did autarky influence the economic policies of countries during the Great Depression?
  • Autarky significantly influenced the economic policies of countries during the Great Depression by pushing them to prioritize self-sufficiency over international trade. Nations adopted protectionist measures like tariffs and quotas to limit imports and bolster domestic industries. This shift aimed to stabilize their economies amid global market instability but also led to inefficiencies as competition diminished.
• Evaluate the effectiveness of autarky as a response to the economic challenges faced during the Great Depression.
  • The effectiveness of autarky during the Great Depression was mixed. While it provided some level of immediate relief by reducing dependency on foreign goods, it often resulted in economic inefficiencies and stagnation. Countries that pursued autarkic policies faced challenges like limited access to foreign markets and resources, which ultimately hindered long-term growth and recovery. This led many nations to reconsider their approach post-crisis.
• Analyze the long-term impacts of autarkic policies implemented during the Great Depression on post-World War II economic strategies.
  • The long-term impacts of autarkic policies during the Great Depression were profound, shaping post-World War II economic strategies toward more liberal trade practices. As nations recognized the limitations of self-sufficiency, they began embracing open markets and international cooperation, leading to organizations like GATT. The shift away from isolationism facilitated global economic integration, fostering growth and innovation that were stifled under autarkic regimes.

Related terms

Protectionism: An economic policy that restricts imports from other countries through tariffs and other trade barriers to protect domestic industries.

Economic Isolationism: A foreign policy that seeks to minimize a country's involvement in international economic relations and trade.

Self-Sufficiency: The ability of a country to fulfill its own needs without relying on external assistance or resources.