Closed economy

Autarky is the quality of being self-sufficient. Usually the term is applied to political states or their economic systems. Autarky exists whenever an entity can survive or continue its activities without external assistance or international trade. If a self-sufficient economy also refuses all trade with the outside world then it is called a closed economy.

Autarky is not necessarily an economic phenomenon; for example, a military autarky would be a state that could defend itself without help from another country, or could manufacture all of its weapons without any imports from the outside world.

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. For example, many countries have a policy of autarky with respect to foodstuffs and water for national security reasons.

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 (Greek: αὐτoκρατία "government by single absolute ruler") or autarchy (Greek: αὐταρχία – the idea of rejecting government and ruling oneself and no other).

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)—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. 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. German armament spending went from under 2% of gross national product in 1933 to over 23% in 1939. Germany also relied upon ersatz or synthetic substitutes, such as nitrile rubber or oil obtained through coal liquefaction.

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