1

Closed Economies: Understanding the Isolationist Approach

Definition

A closed economy is an economic system in which a country does not engage in international trade with other countries. This means that there are no imports or exports of goods and services, and the country relies solely on its own resources for its economic needs.

Characteristics

Closed economies are characterized by the following:

• No international trade: Closed economies do not participate in the global economy and do not engage in the buying and selling of goods and services with other countries.
• Self-sufficiency: Closed economies aim to be self-sufficient and produce all the goods and services they need within their own borders.
• Limited competition: The lack of international trade creates a limited market for domestic businesses, reducing competition and innovation.

Pinterest