Autarchy is a situation of total independence and self-sufficiency in political and socioeconomic terms. Thus, the country or region does not participate in international trade .
That is, an autarkic territory internally produces everything that its citizens consume. That way, you don’t need to buy any merchandise from abroad.
The formation of autarchies has always responded to the objective of self-supply. This implies that the different demands of the inhabitants have to be satisfied with the economic activity of the place itself.
On a practical level, it is easy to identify an autarchic state as a closed economy . This is characterized by not carrying out trade activities with other countries, that is, imports and exports are restricted.
Another relevant aspect of autarchy is that the government directs the economic life of the country, controlling prices and production systems. In addition, the authorities seek to influence consumption patterns.
Advantages and disadvantages of autarchy
An autarkic regime is mainly beneficial for producing agents in some sectors who see foreign competition as a threat.
In that sense, often this type of economic policies of self-supply have as their objective the promotion and incentive of certain local or regional industries.
However, it is very difficult for a country to develop all the goods and services that its consumers require. Even if I could do it, the cost of production could be very high in some markets.
History has shown that the most extreme autarchy is a utopia, since in today’s world international trade is necessary. In addition, it allows the use of comparative advantages .
Another point to underline is that in autarchy the central government has full control over the country’s natural resources and its industrial fabric. Therefore, those areas that have a greater base of natural or energy resources are more likely to function as autarchies.
Examples of economies in autarky
Often it is dictatorships or other totalitarian systems that apply autarchy, mainly for ideological motivations. Thus, we see examples of the left, such as North Korea or the communist regimes of the missing Soviet Union. But there are also cases of governments of the extreme right, such as Nazi Germany.
Mainly, we find historical examples of autarkic economies in periods after the great wars of the twentieth century. This is the case of Spain after the Civil War and in the first stage of the Franco dictatorship.
It should also be noted that there may be brief periods of autarchy, for example, in the face of a political and warlike conflict, or if a natural disaster occurs that isolates the area.