The New Advocacy for Autarky: Self-Sufficiency is Now Once Again Becoming Popular for Geopolitical Reasons

Abstract

International economic relations and trade in particular have been thriving since World War II. Whilst the lowering of trade barriers and the dismantling of trade restrictions have long enjoyed support both among trade economists and policymakers, there has recently been a swing back to protectionist policies. In virtually all major economies, a surprising new interest in autarky can be observed. Today, both the USA and the member countries of the European Union prioritize domestic production of certain products, especially semiconductors. China has taken a decisive turn to trade policies that emphasize self-sufficiency and domestic production. India, which has long favoured sourcing from domestic producers, has at least partially embraced self-sufficiency. We analyze and add a historical lens to these recent developments. If they will continue, we argue that the world will see negative effects on welfare if these trends continue unchecked.