Autarky is the quality of being self-sufficient. Usually the term is applied to political states or their economic systems. The latter are called closed economies.[1] Autarky exists whenever an entity can survive or continue its activities without external assistance or international trade. Autarky is not necessarily economic. For example, a military autarky would be a state that could defend itself without help from another country. Autarky can be said to be the policy of a state or other entity when it seeks to be self-sufficient as a whole, but also can be limited to a narrow field such as possession of a key raw material.
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The word "autarky" is from the Greek: αὐτάρκεια, which means "self-sufficiency" (derived from αὐτο-, "self," and ἀρκέω, "to suffice"). The term is sometimes confused with autocracy/autarchy (Greek: αὐτoκρατία/αὐταρχία "government by single absolute ruler"). Libertarian theorist Robert LeFevre used "autarchy" and "autarchism" in the sense of self-government to describe his own political philosophy and to distinguish it from anarchism.
Mercantilism was a policy followed by empires, especially in the 17th and 18th centuries, forbidding or limiting trade outside the empire. In the 1930s, autarky as a policy goal was sought by Nazi Germany, which maximized trade within its economic bloc and minimized external trade, particularly with the then world powers such as Great Britain, the Soviet Union, and France, with which it expected to go to war and consequently could not rely upon. The economic bloc wherein trade was maximized comprised countries that were economically weak—namely, those in South America, the Balkans and eastern Europe (Yugoslavia, Romania and Hungary)[2]—and had raw materials vital to Germany's growth. Trade with these countries, which was negotiated by then Minister of Economics Hjalmar Schacht, was based on the exchange of German manufactured produce directly for these materials rather than currency, allowing Schacht to barter without reliance on the strength of the Reichsmark.[3] However, although food imports fell significantly between 1932 and 1937, Germany's rapid rearmament policy after 1935 proved contradictory to the Nazi Party autarkic ambitions and imports of raw materials rose by 10% over the same period.
Today, complete economic autarkies are rare. A possible example of a current autarky is North Korea, based on the government ideology of Juche (self-sufficiency), which is concerned with maintaining its domestic localized economy in the face of its isolation. However, even North Korea has extensive trade with the Russian Federation, the People's Republic of China, Syria, Iran, Vietnam, and many countries in Europe and Africa. Bhutan, seeking to preserve an economic and cultural system centered around the dzong, has until recently maintained an effective economic embargo against the outside world, and has been described as an autarky. With the introduction of roads and electricity, however, the kingdom has entered trade relations as its citizens seek modern, manufactured goods.
A self-sufficient economy can experience diseconomies of scale in the public and private business sectors. It is evident that several nations in the world do not have direct access to certain raw materials such as oil, coal, gas, wheat or fabrics such as wool due to geographical boundaries including climate, location, land size or population numbers.
Therefore the production of scarce resources becomes relatively expensive and a large cost to consumers and firms that need to pay a higher price for these goods and services.
The globalisation process has reinforced the concept of comparative advantage as regions of economic exchange become more integrated across the world, due in part to the rising influence of transnational economic bodies such as the World Bank, the International Monetary Fund, the World Trade Organization and trade agreements between nations with differing degrees of industrialization such as the Central American Free Trade Agreement, North American Free Trade Agreement, the European Union, KORUS FTA and AFTA, beginning in the last quarter of the 20th Century. Cheaper labor, commodity and compliance costs for multinational firms, access of corporations to raw materials and consumer markets located in previously autonomous regions, and the establishment of zero tax export zones in developing nations are major motivational factors influencing the growth of international trade and property law harmonization and the corresponding reduction in national economic self-sufficiency.