Autarky is when a country completely cuts off all trade with the outside world, while an economic embargo is when a country bans all trade with a specific country. In other words, autarky is an economic system in which a country or other political entity produces everything it needs within its own borders. An embargo is a government order that restricts trade with another country or region.
What is autarky?
Autarky is the complete economic independence of a state, particularly in regard to its foreign trade. An autarkic state does not engage in any international trade, instead producing all the goods and services it needs domestically.
The term “autarky” comes from the Greek auto (self) and arkein (to suffice) and was first used in the 17th century. The concept is similar to that of self-sufficiency, but with a focus on economic rather than physical independence.
There are several reasons why a state might choose to pursue autarky. One is to protect itself from economic Dependence on other countries, which could lead to political vulnerability. For example, during the Cold War, many Communist countries pursued autarky in order to insulate themselves from Western influence.
Another reason is to shelter domestic industries from foreign competition. This can be done by imposing high tariffs on imported goods, as well as quotas and other restrictions on imports.
Finally, autarky may be seen as a way to achieve economic development. By protecting domestic industries and keeping foreign capital out, a country can encourage the development of its own industry and infrastructure. This was the rationale
What is an economic embargo?
An economic embargo is a government-imposed trade restriction that is designed to isolate a country’s economy. The goal of an economic embargo is to damage the target country’s ability to trade with other nations and, as a result, its overall prosperity.
An economic embargo can be imposed for a variety of reasons, including political or military conflict, human rights violations, or nuclear proliferation. In most cases, an embargo is imposed in an effort to change the behavior of the target country.
While economic embargoes are sometimes effective, they often have negative consequences for the countries that impose them. In many cases, economic embargoes end up hurting the very people they are intended to help.
Why countries choose autarky or economic embargo
There are many reasons why countries choose to either pursue autarky or an economic embargo. Some countries may feel that they need to be self-sufficient in order to protect their own interests, while others may want to punish another country by cutting off trade.
Autarky can be a difficult path to pursue, as it requires a country to be completely self-sufficient. This can be a challenge for countries that are not naturally resource-rich. In addition, autarky can lead to isolated economies and a lack of competition, which can stifle innovation and growth.
Economic embargoes, on the other hand, are often used as a tool of foreign policy. They can be used to pressure another country into changing its policies, or as a form of punishment for unacceptable behavior. However, economic embargoes can also have negative consequences for the country imposing them, as they can lead to retaliation and a loss of trade partnerships.
Does autarky mean no trade?
No, autarky does not mean no trade. An embargo is an official ban on trade with another country. Autarky is the policy of economic self-sufficiency. A country practicing autarky would seek to produce all the goods and services it needs within its own borders, without relying on imports from other countries.
What happens when a country goes from autarky to free trade?
When a country opens up its economy and starts trading with other countries, it is said to have moved from autarky to free trade.
There are several key differences between autarky and free trade. In an autarkic economy, there is little to no competition; firms are often state-owned and produce only for the domestic market. In a free trade economy, firms face competition from both domestic and foreign companies. This leads to higher quality products and lower prices for consumers.
Another key difference is that in an autarkic economy, resources are often not used efficiently. For example, a country may have plenty of iron ore but no way to process it into steel. In a free trade economy, resources can be traded so that they can be used more efficiently. This leads to higher economic growth and development.
Photo by Jorge Fernández Salas on Unsplash
